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By Dan Culloton | 10-15-2014 03:00 PM

A Concentrated Fund With Surprising Downside Protection

RiverPark/Wedgewood's highly concentrated portfolio may sometimes be out of step with the market, but overall the fund has provided investors with a good risk/reward proposition.

Dan Culloton: The Fund Medalist of the Week is RiverPark/Wedgewood (RWGFX). It's a fund run by a group of subadvisors in St. Louis, Missouri. It's a concentrated growth fund.

The reason why we like this fund is because they don't try to out-trade anybody or out-asset-allocate anybody. What they try to do is stay within their circle of competence, which is knowing a few stocks very, very well and buying them when they are inefficiently priced and holding them for the long term.

It's an eclectic portfolio of 20 to 22 stocks and includes things like Berkshire Hathaway (BRK.A), Apple (AAPL), Google (GOOGL), and Verisk Analytics (VRSK). So, it's a very eclectic, diverse portfolio even for being very, very focused. And it has shown surprising downside protection and resilience for a fund this concentrated.

Now, there are risks here because it is a 20 to 22 stock portfolio, and it's going to look out of step with the market sometimes. And its returns could swing for short periods of time because of its concentration. But overall, we think this fund has provided investors with a good risk/reward proposition both at this fund, which has only been around for a couple of years, and at a separate account that this team has managed since the early '90s.

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