Five Funds: Small-Cap Value Offerings That Earn Your Money

Curtis Jensen, at the helm since 1997, picks companies for this concentrated fund with an eye of clean balance sheets, strong management and understandable businesses -- and, of course, undervalued stocks. Jensen tends to make concentrated sector and stock bets, including recent moves into the technology arena: badly bruised Comverse Technology(CMVT) is now the third-largest holding thanks to Jensen's recent buying, according to Third Avenue's Web site.

This focused approached means fundholders may be in for a bumpier ride -- and some down times, like in 2001 and 2002 -- for the long run, this fund has been a winning pick. Its five-year average annual return of 5.95% through January 17 puts it in the top 20% of its peers, according to Morningstar.

The fund sports a below-average expense ratio of 1.23%.

5. (FAMEX)FAM Equity-Income

This little gem of a fund has performed exceptionally well since its April 1996 inception, turning in one-, three- and five-year returns in the top fifth of its small-cap value peers. FAM Equity-Income posted a modest 2.2% loss in 2002, but it sports a three-year average annual return of 12.36% and five-year average annual return of 6.36%, according to Morningstar.

Tom Putnam, founder and chairman of Fenimore Asset Management (the FAM of the fund's title), co-manages the $60 million-in-assets fund with Paul Hogan. The tiny fund, which sports a 1.21% expense ratio, holds on 31 stocks, so it certainly qualifies as a concentrated offering. According to FAM's Web site, the top seven holdings -- among them well-regarded companies like Ethan Allen(ETH) -- each constitute more than 4% of the fund's portfolio.

Fenimore -- based in Cobleskill, N.Y. and taking its name from "local" author James Fenimore Cooper -- manages only two funds and isn't too well-known, but you can buy the funds through Fidelity's Fund Network and other big shops.

>To order reprints of this article, click here: Reprints