FUND WATCH


A New Go-Anywhere Fund

Keeley All Cap Value gives its bargain-hunting manager the flexibility to invest in companies of all sizes.



John Keeley is taking his successful strategy with small-company stocks to the entire market. In mid June he launched Keeley All Cap Value (symbol KACVX; 888-933-5391). Keeley concentrates on stocks of companies that are restructuring. He looks at companies that have been spun off by their parents, financial institutions that are converting from mutual to public ownership, companies that have emerged from bankruptcy and distressed utilities.

Keeley has produced an impressive long-term record investing in small-company stocks. Over the past ten years, Keeley Small Cap Value (KSCVX) ranks 20th among all stock funds, with an annualized return of 16.9% to June 1. That's an average of four percentage points per year better than the average of all funds that invest in small, undervalued companies.

The go-anywhere fund does not mean Keeley has abandoned small-company stocks. Says he: "Our first love is small-caps. We're still finding undervalued stocks. The fund allows us to follow value opportunities into the large caps."

The inspiration for the all-cap fund came from the performance of a $100-million account that Keeley manages for a large corporate client. "A Fortune 100 company approached us about running some pension money and the feeling of the people there was they wanted to us have the latitude to go where the opportunities were," says Mark Keeley, John's son and vice-president of Keeley Asset Management. That particular account returned 20% last year, he says. By comparison, Keeley Small Cap Value returned 16% in 2005.

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All Cap Value gives Keeley more room to work with than its small-cap cousin. In the all-cap fund, Keeley can take a position not only in a spinoff but in the parent company that did the spinning. The downside is that opportunities among stocks of large companies are harder to find than with small companies because more analysts cover large firms.

This isn't Keeley's first foray outside of small-company arena. Last September, he launched Keeley Mid Cap Value (KMCVX), which invests in stocks of midsize companies. All of the Keeley funds impose front-end sales charges of 4.5%. John Keeley, who primarily manages money for institutional investors, started the small-cap fund 13 years ago because he "needed something for friends and family who wanted to invest with us but didn't have a million bucks," says son Mark. Now investors will see if Keeley's strategy works as well -- or better -- when he can play with the entire market.




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