FBR Small Cap: In Search of Compounding Machines

Chuck Akre uses a value-investing discipline to buy stocks of small growth companies.

This may finally be the year of large-company stocks. Year to date through May 16, the Russell 1000 index of large-cap stocks returned 8%, more than three percentage points better than the Russell 2000 index of small-company stocks. But instead of chasing returns and leaving your allocations all out of whack, make sure you keep a reasonable helping of small-company stocks in your portfolio.

One fund we've grown to like is FBR Small Cap (symbol FBRVX), a new member of the Kiplinger 25, a list of our favorite no-load funds. And what's not to like? Run by Chuck Akre of subadviser Akre Capital Management since 1996, FBR Small Cap has returned an astounding 19% annualized over the past decade. But what's really unusual about Akre, who's situated in Middleburg, Va., is that he's a growth manager who adheres religiously to value-investing principles.

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Contributing Writer, Kiplinger's Personal Finance

Andrew Tanzer is an editorial consultant and investment writer. After working as a journalist for 25 years at magazines that included Forbes and Kiplinger’s Personal Finance, he served as a senior research analyst and investment writer at a leading New York-based financial advisor. Andrew currently writes for several large hedge and mutual funds, private wealth advisors, and a major bank. He earned a BA in East Asian Studies from Wesleyan University, an MS in Journalism from the Columbia Graduate School of Journalism, and holds both CFA and CFP® designations.