Investing Like the Pros

Investing like the most respected and successful investors is not as difficult as many may think. The problem often lies in finding out in who these well-respected and successful professionals really are. So, we do that research for you. According to Morningstar’s 2009 manager of the year awards, Charlie Dreifus was manager of the year in 2008. He manages Royce’s Special Equity Investment fund, a domestic equity fund that has been ranked as a 5-star fund for years.

So, what does Mr. Dreifus do that has allowed him to earn this prestigious title?

A quick stop over at the Morningstar website reveals how Dreifus invests his portfolio of $1.5 Billion, a portfolio which should be noted is considered Low risk with above-average returns. In fact, Dreifus has been holding a portfolio of small-cap value investments. This means these are among the smallest firms that trade on an organized exchange and they are considered undervalued in terms of price.

Getting a little more specific, we see that Dreifus is a big fan of the Consumer Goods arena (22% of his portfolio is invested in this sector), followed up closely by the Consumer Services sector at 17.5%. That may seem like an interesting revelations, and it normally would be; over 40% of his $1.5 Billion portfolio is invested in the consumer goods and services sectors.

What does this mean exactly? A quick click on the “Top 25 Holdings” tab at Morningstar tells us exactly what his top holdings are, where he has placed roughly 1/3 of his entire portfolio (or $500 million, give or take).

While many might scoff at the fact that Dreifus does not invest in dividend paying financial services firms (not even small cap value financial services firms), his track record speaks for itself. Again, his choice of funds has earned his portfolio a “low risk” ranking among its peers while simultaneously achieving above-average returns. How many investors can claim the same? (Very few indeed).

It is very obvious, then, that to invest like the pros who have achieved tremendous success in their industry, one nearly needs to know where to find information about these pros are investing. A single website can provide that information: , which ranks mutual funds (and names its top performing fund managers). But most importantly and interestingly, this website will list the top 25 holdings in each of the funds it covers. This not only takes the guess work out of where one should invest his or her money, but how they can achieve success easily without taking on unnecessary risks.

By Suzana