Their ultra-low-risk approach merits putting these two funds on your radar screen. By Steven Goldberg, Contributing Columnist February 28, 2006 Cobleskill is a long way from Wall Street -- 175 miles due north, to be exact, in the Central-Leatherstocking region of upstate New York. Featuring rolling hills and evergreens, the farming community boasts about 7,000 inhabitants, and single-family homes go for roughly $100,000. It's the last place you'd expect to find a mutual fund company.But Tom Putnam, senior manager of the FAM Value and FAM Equity-Income funds, thinks the small-town atmosphere promotes clear analysis. "We're far from the rumor mills of Wall Street," he says as he gazes out of a conference-room window on snow-covered fields. "If you really understand your companies, you don't have to worry about what Wall Street thinks." Impressive results The numbers bear him out. FAM Value (FAMVX; 800-932-3271) returned an annualized 11% over the past five years to January 3. That compares with 9% for Standard Poor's Midcap index. FAM Equity-Income (FAMEX), which buys only dividend-paying stocks, also returned an annualized 11% over the period. Yet the funds are less volatile than 90% of funds that invest in midsize companies. They both made money during the 2000-02 bear market. Since its inception in 1987, FAM Value has never lost more than 5% in a calendar year, and Equity-Income never more than 7% since its 1996 launch. At 61, Putnam looks and acts like an affable small-town banker. He talks slowly and calmly, and he's meticulous about his work. A Warren Buffett disciple, Putnam believes in analyzing stocks by assessing the value of companies. "When my father and I started Fenimore Asset Management in the mid '70s, we tried to evaluate the economic worth of a business and buy the business at a discount," he says. "That's essentially what I try to do today." Advertisement Putnam looks for profitable, growing companies with low debt and shares that are selling at reasonable prices relative to profits and sales. He, his co-managers and his analysts spend a lot of time getting to know company executives. "We want managers who are passionate about their business and exude honesty and integrity," he says. Ultra-low turnover Although the FAM funds invest mostly in small and midsize companies, Putnam will buy a large-company stock if it meets his criteria. And he won't sell a stock simply because it has appreciated. Indeed, stock sales at FAM are about as common as winter heat waves in Cobleskill; on average, Putnam holds stocks for about seven years. The two FAM funds have had three straight mediocre-to-poor years relative to other funds that invest in smaller companies. That's not necessarily a bad thing for would-be investors. Often, the best time to invest in a fund with a superior long-term record is after it's had a few tough years.