Jacob's Ladder to Fund Fame Is No Easy Climb

A look at how five other star managers fared on their own.
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Everybody wants to know whether to buy Ryan Jacob's new fund.

You know, the wonderboy who guided the

(WWWFX) - Get Report

Internet fund to triple-digit returns is going to

start his own firm,

Jacob Asset Management

, and open a new Internet fund.

Frankly, there's no way to know how his new fund will fare. But if you're tempted to invest, you might want to look at the fortunes of other well-known managers who ventured out to start to their own firms. Here's a look at five of them. Within this group are some spectacular success stories, like Tom Marsico's. But some have struggled on their own, whether battling horrid market conditions or independent fund directors. Jacob should cross his fingers and burn some incense.

Name:

Don Yacktman

Launch Pad:

Selected American Shares

fund. He managed it for more than nine years and earned a rep as an outstanding value manager.

Putting His Name to Work:

After being named

Morningstar's

1991 mutual fund manager of the year, Yacktman opened his own Chicago-based firm in 1992 and started two funds: the

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Yacktman fund and

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Yacktman Focused. "I haven't done nearly as well on my own," confesses Yacktman. "It's not a function of being on my own. From an analytical standpoint, I think I'm doing a much better job. It's a function of a very different market environment."

In the past year, Yacktman's

battle with his funds' board of directors has gotten more attention than his returns. Last year, the independent directors charged that Yacktman had veered from his stated investment style and into small-cap stocks. They tried to have him dismissed as the manager. Yacktman denied the accusations and contended that it was personal. In the end, the shareholders voted to keep Yacktman at the helm.

Even with the board dispute behind him, Yacktman hasn't been able to improve the returns on his two funds, even though small-cap and value stocks have come back. This year, the Yacktman fund is down 2.5%, while the Focused fund is off by 7.7%. That's compared to a 16.2% return for the

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Vanguard 500 Index fund. What's he waiting for?

Name:

Garrett Van Wagoner

Launch Pad:

(GSCQX)

Govett Smaller Companies fund, where he produced enormous numbers. The fund returned 58.5% in 1993 and 69.1% in 1995.

Putting His Name to Work:

Van Wagoner started his own funds around the beginning of 1996 and witnessed a deluge of assets. In their first few months, his three original funds took in more than $1 billion.

The immense amount of press helped draw assets. But "we did turn some stuff down," insists Peter Kris, managing director at Van Wagoner's firm. One publication wanted to photograph Van Wagoner jumping through a flaming hoop. That didn't happen.

The market for aggressive growth stocks gave Van Wagoner a good smack in the face shortly after starting his firm. During their first few months, his funds were flying. His

(VWEGX)

Emerging Growth fund was up 56.6% in from January through May 1996. But over the remainder of that year, the fund fell 19%. In 1997, it was down 20%, while the

S&P 500

soared 33.4%.

Last year and this year have been much kinder to Van Wagoner. For 1999, his Emerging Growth fund has rocketed an unfathomable 119.6%, fueled in part by Internet stocks. That would be a just reward for any shareholders who have hung onto this fund through its worst moments.

Name:

Tom Marsico

Launch Pad:

Janus

. Marsico ran the

(JAVLX)

Janus Twenty and

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Janus Growth & Income funds. During his 11 years with the Denver-based fund company, Marsico racked up some impressive numbers. In 1991, for example, Janus Twenty soared 69.2%, compared with a 30.5% rise for the S&P 500.

Putting His Name to Work:

Marsico left Janus in 1997 to start his own firm,

Marsico Capital Management

. He has been able to produce stellar returns on his own two funds,

(MFOCX) - Get Report

Marsico Focus and

(MGRIX) - Get Report

Marsico Growth & Income. Last year, these funds returned 51.3% and 43.4%, respectively. This year, they are both up just over 20%.

OK, so the Janus funds that he left behind have been outperforming his own self-titled funds, and he's definitely had a healthy tailwind provided by the large-cap market. But he's pulling in money by the truckload. (The firm's assets have topped $7 billion.) Let's hope his shareholders are as handsomely rewarded over the coming years.

Name:

Elizabeth Bramwell

Launch Pad:

(GABGX) - Get Report

Gabelli Growth fund. Bramwell ventured out on her own in 1994, setting up her own money-management firm and starting the

(BRGRX)

Bramwell Growth fund.

Putting Her Name to Work:

In 1996, Bramwell received permission from the

Securities and Exchange Commission

to continue using the track record from her seven years on the Gabelli Growth fund in the prospectus of her own eponymous fund, setting a precedent for other fund managers who venture out on their own.

Since its August 1994 inception through the end of the second quarter of 1999, the Bramwell Growth fund had not been able to outpace the S&P 500. Bramwell's fund returned an annualized 25%, compared with 27.6% for the large-cap index. And the fund hasn't exactly been an asset magnet either. It has $268.7 million in assets, according to Morningstar. That's certainly acceptable, but it doesn't compare to the money that some growth funds have sucked in during this booming market.

Name:

Irene Hoover

Launch Pad

:

(JVMCX) - Get Report

Jurika & Voyles Mini-Cap fund, where she racked up peer-crushing returns. From its October 1994 inception through September 1997, the fund delivered an average annual return of 43.1%, making it the best-performing diversified equity fund tracked by

Lipper

.

Putting Her Name to Work:

In 1997, Hoover left Jurika & Voyles to start the appropriately named

Hoover Capital Management

in San Francisco.

Hoover hasn't plastered her name over a bushel of funds. But investors can invest with her through the

Forward Funds

. She is the subadviser for the

(FFSCX)

Forward Small Capitalization Stock fund, which opened last October.

When the fund launched, investors were certainly not favoring the smaller area of the market. So far, the fund only has $55 million in assets. This year her fund is up 11.2%, compared with 12.9% for the

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Vanguard Small-Cap Index fund. But lately, the small-cap market has been a bit more gracious to managers toiling in the area. Her fund would certainly become more popular if small-caps take over the party.

Send your questions and comments, along with your full name, to

deardagen@thestreet.com.

Dear Dagen aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.