Five Reopened Funds You May Have Overlooked

Since January 2008, roughly 90 mutual funds have reopened. Some reopenings got more fanfare than others, including  Sequoia's (SEQUX) May 2008 announcement that it would admit new investors for the first time in 25 years. Small-cap funds, whose relatively little asset bases have shrunk during the sell-off dominate the list. There also are a lot of international equity funds, particularly those that invest in hard-hit foreign small-cap and emerging-markets stocks.

We've rounded up some of the better reopened funds that may have flown under your radar. Some of them have ugly recent records, but strong long-term fundamentals. And last year's market losses haven't been all bad. They've allowed the funds to book losses that they can use to offset taxable capital gains for years to come. Below we highlight five recently reopened funds worth considering that also have deeply negative potential capital gains exposures, which means they should be very tax efficient in the future.

	Category	Potential Cap Gains Exposure
Artisan Mid Cap Value (ARTQX)	Mid-Cap Value	-61
Calamos Convertible	Convertibles	-23
FMI Common Stock (FMIMX)	Mid-Cap Blend	-49
Schneider Sm Cap Value	Small Value	-144
Williams Blair Int Growth (WBIGX)	For. Large Growth	-113
As of 03-18-2009.

 Artisan Mid Cap Value (ARTQX)
This mid-cap value Fund Analyst Pick was closed for three years before it reopened October 2008. Managers James Kieffer, Scott Satterwhite, and George Sertl employ a strict value style in their search for medium-sized companies. They have built a solid record before and after taxes compared with most peers since the fund's April 2001 inception. Last year's 27% loss hurt, but the fund did better than more than 90% of its peers. Losing less during the market downturn got investors' attention, and new money has flowed into the fund. We think this will give the managers the flexibility to scoop up high-quality businesses selling at distressed prices. And because the fund's potential capital gains exposure is -61%, it will be a while before fundholders see a capital gains distribution.

 Calamos Convertible (CCVIX)
Investors clamored to get this convertible-bond fund when it reopened in October 2008. This may have seemed counterintuitive because the typical convertible-bond fund lost around 33% last year and this fund lost 26% in 2008. Normally, investors look to convertibles, which are bonds that convert to stocks at a preset price, to provide the downside protection of bonds with some of the upside of stocks. Both company stocks and bonds suffered last year, and troubled hedge funds dumped converts in a rush, so the securities offered no protection. But we think this remains a strong fund. John and Nick Calamos have navigated various market conditions over the past two decades, and their decision to reopen the fund was based on the opportunities created by the broad sell-off in the convertible market. We'd expect the managers to close the fund again if converts get hard to trade or too expensive. So, it's a good time to look at this fund.

 FMI Common Stock (FMIMX)
After being shuttered for four years, this mid-cap blend fund reopened to new investors in February 2008. Deep research and patience have been comanagers Patrick English and Ted Kellner's recipe for success. The fund's turnover has been among the lowest in the category, which has contributed to its solid aftertax record. In 2008, the fund lost 20%, which still was better than 99% of its peers. True, the portfolio had allowed its cash cushion to climb above 10% of assets during the second half of the year. But since the fund reopened, the managers have used most inflows to add to almost all of the 40 stocks in the portfolio, which points to their conviction. This fund's strong 10-year investor returns, which measure how effectively the typical investor uses this fund, are another notch in its favor. It's not terribly surprising that investors have found the fund easy to use, as it held up remarkably well during the 2000-02 bear market and lost much less than peers during 2008's market downturn.

 Schneider Small Cap Value 
After being closed to new investors for roughly six years, this small value Analyst Pick reopened its doors in April 2008. This fund has been up against the ropes since mid-2007, due in part to manager Arnold Schneider III's missteps with mortgage lender stocks. From July 2007 through March 16, 2009, the fund has lost a painful 51%, far more than the typical small-value fund and Russell 2000 Value Index, which both lost roughly 37% in that time frame. Schneider's tendency to invest in distressed firms and shaky areas of the market is certainly not for everyone. In the long term the fund has been more volatile than the typical peer (as measured by 10-year standard deviation). Would-be investors need the fortitude to ride out such periods of underperformance to fully benefit from the good times. And at last count, Schneider can sell this entire portfolio nearly one and a half times and still pay not gains.

 William Blair International Growth (WBIGX)
In recent months, this fund's asset base wasn't nearly as stable as some of the other funds' on this list. Like most international funds, it began bleeding assets in September, and the fund's reopening in November 2008 did little to stop the rate of outflows. Investors in this fund felt an even more painful and deeper-than-average 52% loss for 2008. That's partly because longtime manager George Greig tends to own more small-cap and emerging-markets stocks than his typical peer. That's reason to like this fund, though, as it could serve as a one-stop option for international-equity exposure. More importantly, Greig's focus on low-debt firms with good growth prospects, as well as overall strong stock-picking, has steered this fund well through a variety of market conditions. The fund has beaten the typical foreign large-growth fund in more than 80% of 109 one-year rolling periods from March 1999 through February 2009. The fund's hefty tax loss is another reason to consider it.