An All-Star Break

Funds run by teams of marquee managers from different firms have been around for years. But here's a new wrinkle: a stellar fund available at a terrific price.

SunAmerica Focused Alpha Growth boasts two all-star managers: Ron Baron and Tom Marsico. The $362- million fund holds ten large-company issues, selected by Marsico, which account for 65% of assets, and 20 small- and midsize-company stocks, picked by Baron, which account for the remaining 35%. In mid May, the portfolio was valued at $21 per share, yet you could buy the fund for less than $18. How could that be?

Focused Alpha Growth (symbol FGF) is a closed-end fund. Unlike more-familiar open-end funds, closed-ends issue a fixed number of shares. Those shares trade like stocks and can be worth more or less than the assets the funds hold, depending on investor demand.

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In this case, investors seem to be making a big misjudgment. From the fund's July 2005 launch to May 15, its assets returned 12%. That tops the Russell 3000 index by six percentage points. Moreover, both managers have superior long-term records. Marsico Growth is in the Kiplinger 25 (see "The 25 Best Mutual Funds," May), and Baron's flagship fund, Baron Asset, gained an above-average 13% annualized over the past 15 years.

It's not unusual for closed-end funds to trade at a discount, but the size of Focused Alpha's discount -- 14% -- seems unwarranted. It may be that investors are inadvertently lumping it with other closed-end funds, many of which hold bonds or use borrowed money to boost returns. There's no guarantee that the gap between the fund's share price and its asset value will close. But when the stock market gives you access to two accomplished managers at a steep discount, it's almost like found money.