North Carolina's mutual admiration society.

• Author: Dickinson, Lisa
• Position: Money Matters

Mom's old saying that "good things come in small packages" had nothing to do with mutual funds. But a growing number of mutual-fund managers in North Carolina think investors can benefit by thinking small.

Nationally, the number of funds has doubled in recent years, with assets now topping $1.8 trillion. Most of the growth has occurred at the big mutual-fund companies, brokerages and banks, many of which offer scores of proprietary funds. They'll gladly explain how big is beautiful -- and safer.

But a dozen or so tiny funds popping up around North Carolina offer a different approach to investors averse to following the herd. Most are run by money managers who had handled accounts no smaller than $250,000. The new funds, however, typically require initial investments of only $300 to $10,000. Still, "the funds are managed like they are another account," says Bob May, a vice president of Trent Capital Management, with offices in Greensboro and Lexington, Ky. Trent manages $100 million in assets, including $5.3 million in its year-old Trent Equity Fund.

Tar Heel mutual funds (Excludes funds managed by banks and brokerages) Assets Minimum (thousands) Load investment Capital Value Fund $6,140 4.5% $5,000 Cornerstone Growth Fund 3,700 0 2,000 JP Growth Fund 37,000 4.5 300 JP Income Fund 23,000 4.5 300 North Carolina Tax Free Bond Fund 3,000 0 5,000 Oak Value Fund 3,808 0 2,500 Oak Value Southeastern Fund 800 0 10,000 Smith Breeden Short Duration U.S. Gov't. 187,000 2.8 1,000 Smith Breeden Intermediate Duration U.S. Gov't. 16,700 3.5 1,000 Smith Breeden Market Tracking 1,900 0 1,000 Trent Equity Fund 5,318 0 5,000 Trust Company of the South Growth 1,792 0 10,000 That's pretty big for one of the new North Carolina funds, although portfolio managers anticipate major growth ahead. "Our main |marketing~ effort is for individually managed accounts, which is one-on-one contact," May says. "We offered the fund because of demand by those clients with smaller amounts to invest."

After establishing a track record through a two-year run as a private fund, Trent Equity started up Oct. 1, 1992, selling shares for $10. Its first year as a public fund was impressive, showing a 20.25% net return during the 12 months ended Sept. 30, 1993. The S&P 500 rose 13.01% during that period. Another successful North Carolina fund, the $3.8 million Oak Value Fund, gained 21.38% from its inception on Jan. 18, 1993, through Dec. 10.

These managers count their small size and...