Mimic Gabelli. Defeat ETFs
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Tuesday, January 10, 2012

Mimic Gabelli. Defeat ETFs

The folks at Gamco Investors Inc. [profile] are making a concentrated bet with a mutual fund. And, so far, the move is winning them hosannas. The Christian Science Monitor is calling the Gabelli crew "tough and creative" for going a different route with the Gabelli Focus Five Fund (GWSAX) than the "index-huggers" in the rest of the mutual fund industry.

Gabelli's path is one the Monitor thinks will have to be copied "if the mutual fund industry is to survive in anything even remotely like its present form."

The path Gabelli is taking is to invest half of the fund -- yes 50 percent -- in their "Focus Five" names. Each of those stocks gets a 10 percent allocation and represents PM Dan Miller's best ideas. The remaining 10 to 20 stocks in the fund are his very good ideas (MFWire coverage).

The fund is not really new, but rather a transformation of an existing fund offered by Gabelli. In a metaphorical sense, the article is suggesting that the entire industry of active equity funds needs a similar transformation to survive the onslaught of indexed products and ETFs.

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