 Fund Profile: Thrivent Partner Small Cap Value A
by Ann C. Logue
There are plenty of religious mutual fund families out there, with investment styles designed to meet the strictures of different sets of observers. Ave Maria funds (www.avemariafund.com) are designed for strict Roman Catholics, Timothy Plan (www.timothyplan.com) for conservative Christians and Amana funds (www.amanafunds) for Muslims. Thrivent funds are for Lutherans, but not because of their investment styles. Thrivent, formerly known as Lutheran Brotherhood, isn't directly affiliated with the Lutheran Church. Instead, it is structured as a fraternal organization for Lutherans offering a full range of insurance, investment and banking services. Thrivent funds have no social screens or religious requirements for their investments. The Thrivent Partner Small Cap Value Fund, one of the best-performing in the family, doesn't own lutefisk processors and General Mills (NYSE: GIS), maker of Jell-o, either.
In fact, the Thrivent Partner Small Cap Value Fund isn't managed by Thrivent. Instead, Thrivent has a sub-advisor relationship with T. Rowe Price, the no-load mutual fund behemoth. The fund invests primarily in companies that have the same market capitalization range as the Russell 2000 Index, which are the 2,000 smallest companies in the Russell 3000 Index, which in turn are the 3,000 largest American companies. However, the prospectus allows the fund management to buy other companies if desired, as well as to hold on to stocks after they outgrow the Russell 2000.
Within that size guideline, fund manager Preston Athey looks for stocks that appear to be undervalued using price/earnings, price/book, price/cash flow or other metrics. The fund's top holding at the end of January 2008 was ProAssurance Corporation (NYSE: PRA), provider of medical and legal malpractice liability policies. It makes up 2.01% of the fund's $145 million in assets. Next on the list is Metal Management, a scrap metal processor since acquired by Sims Group (NYSE: SMS), at 1.70% of assets. In third place, at 1.69% of assets, is Kirby Corp. (NYSE: KEX), which provides a range of transportation, fuel, and engine services to marine transportation companies and power generation firms. The largest sector in the fund, at 24.09% of assets, is industrials. Next is financials, ranging from real estate investment trusts to insurance companies, at 19.01% of assets, followed by consumer discretionary, clocking in at 10.05% of the fund's holdings.
Thrivent Funds are sold with a load. The Partner Small Cap Value Fund's A shares have a 5.50% front-end load with the first breakpoint at $50,000. There's also a 0.25% 12b-1 fee. Investors who prefer to pay no front load can opt for the B shares, which instead have a 5% contingent deferred sales charge and a 1.00% 12b-1 fee. The fund comes with a management fee of 0.70% and other expenses of 0.49% (0.10% of which Thrivent waives), for a total expense ratio after waiver of 1.34%. This is just a bit below the 1.40% average expenses for the small blend category.
Athey and company put up great numbers. For the year-to-date, it's up 5.08%, compared to the average small-cap blend fund, which is down 3.12%, and the S&P 500, down 4.25%. Performance is also strong for the past three years, with the Partners Small Cap Value posting an average annual rate of return of 11.87 % compared with 7.48% for the S&P 500, and for the past five years, with the fund up 16.92% on average and the S&P 500 up 10.42%. In part because of the strong performance history, the fund started 2008 with an upgrade from three stars to four under the Morningstar rating system.
Like all Thrivent funds, the Small Cap Value fund is sold mostly through the firm's network of financial consultants to people who belong to Thrivent. Membership costs $10 per year and requires documentation of some sort of Lutheran affiliation. Many of the benefits are church related (a magazine about interesting things that members do, volunteer activities, congregation fundraising programs), so they may not be of interest to those who aren't Lutherans. After all, investors can acquire shares through a handful of brokerage firms that also deal in the fund. For that matter, the Partner Small Cap Value Fund is a fine one, but a non-Lutheran can probably find a comparable fund elsewhere.
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