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Fund Spy

As Oakmark Grows, Investors Loom Large

Oakmark's investing-centric corporate culture is solid, but lower fees would be welcome.

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Following big inflows of new cash and a major change in the ranks of its executive staff, Oakmark's culture remains investing-centric and shareholder-aligned. The firm has room for improvement when it comes to costs, but Oakmark shareholders can feel confident that they've entrusted their wealth to a firm whose commitment to its clients largely correlates with its managers' investment prowess.

Assets Spike
The shop has enjoyed eight consecutive quarters of healthy inflows, taking in an estimated $1.7 billion in the first quarter of 2011 alone. At more than $40 billion, total net mutual fund assets are at an all-time high according to Morningstar's data, having nearly doubled since the first quarter of 2009. Including separately managed and subadvised accounts, Harris' firmwide assets stood at $62.5 billion at the close of 2010.

The shop's asset spike could be worrisome, at least in theory. In practice, except in the case of David Herro's  Oakmark International Small Cap (OAKEX), the firm's dramatic asset growth represents little cause for concern. Oakmark's managers primarily target highly liquid large-cap stocks, an area of the market where market-impact risk--the risk of moving prices against the funds as managers build or exit positions--is negligible. And while International Small Cap's $1.7 billion makes it one of the industry's largest foreign small/mid-cap funds, Oakmark has demonstrated its willingness to protect shareholders' interests by reining in inflows when asset bloat threatens.

Shannon Zimmerman has a position in the following securities mentioned above: OAKLX. Find out about Morningstar’s editorial policies.