Fund profile: Van Kampen Small Cap Growth Fund A

www.vankampen.com
(MUTF:VASCX)
Inception date: Nov. 27, 2000
Fund managers: Matthew Hart, Justin Speer
YTD performance: -11.56%
Morningstar category: Small Growth
Morningstar rating: Five Stars

Money managers have long known that certain types of stocks perform better than others even though academic research shows that shouldn’t be the case. Hence, it was remarkable when Ken French and Eugene Fama published their three-factor model back in 1995, which showed that stocks with low price-to-book values and those with smaller market capitalization values outperformed the market in general. What made their research especially noteworthy is that Fama developed the “efficient markets” hypothesis, which said that small-cap stocks should not have an advantage in the market. He came around when the data showed his original theory to be incomplete.

Thirteen years later, the Van Kampen Small Cap Growth Fund is trying to capitalize on the relative advantage that smaller companies have in the market. Of course, the market these days has not been cooperative for stocks of any capitalization. For those who like the buying opportunity being presented, this fund has a strong record that should carry it through whenever the market improves.

The prospectus states that the fund invests in small companies, but it does not define what that means. The fund management seems to use Morningstar’s small-cap style box as its definition, which I’d do, too, if I were picking up five stars there.

The $599 million portfolio has 125 different stocks. The largest position is Central European Distribution Corp. (Nasdaq:CEDC) at 1.61% of assets. It’s a U.S. company that distributes many different U.S. and European liquor brands in Poland and other Eastern European countries. The second-largest holding, at 1.26% of assets, is FTI Consulting (NYSE:FCN), which specializes in consulting on forensics and litigation. In third place is Net 1 UEPS Technologies (Nasdaq:UEPS) at 1.11% of . . .

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