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Description:

From Barron's 7-16-07:

Current Returns:
1 yr: +16.7
3 yr: +17.9
5 yr: +15.3

Bridgeway Funds currently manages $5.6 billion in assets and is run by John Montgomery. "Each year, Bridgeway gives half of its net profits to charities, ranging from community groups and a Haitian medical clinic to genocide relief organizations around the world. Last year, the total came to $8 million...Montgomery limits his own annual compensation to seven times the level of his lowest-paid employee...Bridgeway is quick to close funds to new investors, forgoing additional profit when cash flows threaten to make the funds unwieldy. In addition, the company strives to hold down trading costs and keep its funds tax-efficient, even though some have annual portfolio turnover rates exceeding 100%.

Bridgeway is also one of the few fund groups to rely solely on computer models, rather than a phalanx of high-priced security analysts and managers, to pick stocks. "Ours is a pure quantitative approach that not only takes a lot of cost out of the process, but also much of the emotionalism that so often trips up individual and institutional investors alike," Montgomery says.

Bridgeway's black-box, or quantitative, approach seem to have worked since the company was launched in 1994. Since then, all 11 of its funds have beaten the indexes against which they're measured -- some spectacularly so....Bridgeway follows 3,500 stocks, ranging from behemoths like General Electric down to micro and ultra-small names.

All are ranked according to their price potential, employing a clutch of proprietary computer models looking at different characteristics. Portfolios are then cobbled together from the top finishers in different models to assure diversification in the stocks' attributes, sectors and risk characteristics."

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