Fund name: Sextant Core (SCORX)

Objective: The fund seeks to balance long-term growth and capital preservation by investing in a combination of foreign and domestic stocks, bonds and cash. The basic allocation would be 40% U.S. stock, 20% international stock, 25% intermediate-term investment grade debt and 15% in short-term instruments. While this is not exactly a fund-of-funds, Sextant Core does invest mostly in stocks and bonds held in Sextant’s other funds.

Adviser: Saturna Capital. Saturna oversees five Sextant funds, the Idaho Tax-Free fund and two Amana funds. The Sextant funds and separate accounts contribute about $100 million in assets while the Amana funds hold about $1 billion. The Amana funds invest in accord with Islamic investing principles and Mr. Kaiser was recognized as the best Islamic fund manager for 2005.

Manager: Nicholas Kaiser and Phelps McIlvaine. Mr. Kaiser is president and founder of Saturna Capital. He has degrees from Chicago and Yale. In the mid 1970s and 1980s, he ran a mid-sized investment management firm (Unified Management Company) in Indianapolis. In 1989 he sold Unified and subsequently bought control of Saturna. As an officer of the Investment Company Institute, the CFA Institute, the Financial Planning Association and the No-Load Mutual Fund Association, he has been a significant force in the money management world. He’s also a philanthropist and is deeply involved in his community. By all accounts, a good guy all around. Mr. McIlvaine, a vice president and director at Saturna, is responsible for managing Sextant and Amana’s income funds.

Inception: March 30, 2007. The other Sextant funds on whose portfolio Core draws are between 12 and 20 years old.

Management’s Stake in the Fund: "Hefty" would be an understatement. Collectively, "insiders" own 35% of the Sextant fund shares. In the case of the Core fund, they owned 49% of outstanding shares as of November 30, 2007. Mr. Kaiser personally owns 15% of the fund.

Minimum investment: $1,000 for regular accounts, $100 for IRAs.

Expense ratio: 1.35% on an asset base of about $4 million. There’s a considerable performance adjustment built into the fee: management fee will change by as much as .3% based on performance in the trailing year. There’s also a 2% redemption fee.

Both rating services think of Bond Income as solid and Short-Term Bond as distinctly above average. The Amana funds, which are run by the same managers but not directly linked to Sextant Core, are both widely recognized as stars: five-stars from Morningstar and Lipper Leaders from Lipper.

Sextant positions their Core fund is "a ‘one decision’ default option for retirement plans as well as other long-term investors." Since it’s the most consciously-risk managed fund in an already risk-conscious firm, "the Core Fund follows a value investment style, favoring income-producing securities and those of larger, more seasoned companies." The portfolio is compact – 60 stocks and a dozen bonds – and turnover is in the single digits. That’s consistent with its siblings, since turnover at International averages 8% and Growth only 3%. Its top five holdings are all bonds, while its top five equity holdings are Apple, ConocoPhillips, Procter & Gamble, Praxair and Unilever.

Bottom line: In its short existence, this fund has outperformed some of the industry’s best balanced funds: Bridgeway, Buffalo, Dodge & Cox, Mairs & Power and Vanguard (both active and indexed). That would be just so much noise if it weren’t backed up by its siblings’ ability to consistently do the same over more than a decade. I’m comfortable with my original conclusion: "The manager is experienced, the fund has prospered in a wide variety of market conditions, and the management firm seems highly principled. Kind of like a tiny little version of T. Rowe Price. It’s well deserving of substantially greater attention."

Company link: http://www.saturna.com/