FBR Small Cap FinancialFBRSX

Morningstar Rating

Fund Research and Analysis

by Ryan Leggio

FBR Small Cap Financial investors should hang tight.

The last few quarters have been quite dramatic for financials sector investors, to say the least. The Dow Jones U.S. Financials Small Cap Index fell more than 65% from the June 2007 through March Read more

Kudos

Impressive long-term record.

Experienced management.

Focuses on absolute as well as relative returns. Read more

Risks

The fund's mandate is very limited, even within the financials category. It should perform well when small-cap financials rally and should lag the category when larger-cap stocks are in favor.

Dramatic in- and outflows of cash may adversely affect the fund's tax position and performance.

Above average fees.

Can lag peers for long periods.

Financial industry faces unprecedented uncertainty. Read more

Strategy

This fund invests in small banks and thrifts with plain-vanilla business models. Manager David Ellison seeks stocks that are trading at low P/E and price/book ratios that have steady growth prospects. Read more

Management

David Ellison has run this fund since its 1997 inception, and he also manages FBR Large Cap Financial FBRFX. Prior to joining FBR Investment Services in late 1996, he managed Fidelity Select Home Finance FSVLX for 11 years and posted strong results. Read more

Inside Scoop

This fund invests almost exclusively in small banks and thrifts. Its manager is a seasoned financials stock-picker and boasts a strong record here. This fund does a good Read more

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