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THERE'S A "Grand Re-Opening Celebration" going on throughout the mutual fund business.

With stock prices recovering from the beating they suffered this summer, a smattering of well-known mutual funds that had stopped taking new investors have reopened their doors.

But that's not necessarily a reason to grab your checkbook and rush a check into tomorrow's mail.

For the most part, the funds say they're reopening because the summer sell-off has left plenty of stocks trading at beaten-down prices. By taking in money from new investors, the funds say they'll be able to snap up these bargain-priced shares while they're ripe for the picking.

And some of the funds, especially those that invest in small company stocks, are looking for new investors because they've been hit by a double-whammy: Sharply lower share prices of the stocks they own and heavy redemptions that followed by shareholders trying to get their money out.

As a result, some small-cap funds, which had closed out of concern that they were getting too big, have shrunk to the point where their managers feel they're now small enough to be nimble, even as they take in new investors to help stop the bleeding from their asset base.

Their shriveled asset bases also mean that fund companies aren't making as much money from management fees, which are assessed as a percentage of a fund's total assets. If reopening a battered fund helps rebuild its asset base, it also puts more money in the fund company's pockets through bigger management fees.

Others, like Third Avenue Value, Longleaf Partners and the John Hancock Regional Bank funds, closed because they had too much cash and couldn't find enough stocks that met their standards when prices were historically high before the summer swoon. Each reopened this fall after working down cash levels that at one point exceeded 20 percent of their assets.

"It always sounds like a marketing ploy, but it usually isn't," said Rosemary A. Ligotti, senior vice president at Moors & Cabot Inc. in Amherst.

Still, she's suspicious of funds that reopen only a few months after they close.

"They close them, then they reopen them and it's like the rebirth of the fund," she said. "It's almost like they do it for the glitz and glitter."

So is it worth buying the funds, simply because you now can?

Investment advisers say the answer depends on whether you think the fund's investment strategy and its manager still have what it takes to beat the market in today's ever volatile economy. After all, many of the more prominent funds that reopened recently failed to keep pace with the Standard & Poor's 500 index during the time they turned away new investors.

The last couple of years have been especially hard on small cap funds, which have been hammered by the weakness in their main focus: Small company shares. The Russell 2000 index of smaller company stocks is down 9.5 percent over the last year, while the S&P 500 is up 21.2 percent.

"When a fund is opening, they're typically going to be reopening after a relative period of underperformance," said Anthony J. Ogorek, who runs Ogorek Capital Management in Williamsville. "The issue is whether there's a catalyst for a turnaround."

That means taking a close look at each fund to decide whether its strategy and focus seem poised to thrive in today's market.

"Just because a fund reopens doesn't make it special," said Sheldon Jacobs, the editor of the No-Load Fund Investor newsletter. "Don't rush into them simply because they are now available. My advice is to evaluate each fund on its merits."

That makes things complicated for investors. Many of the funds, including the Longleaf Partners, T. Rowe Price Small-Cap Value, Heartland Value and Oakmark Small Cap Value, were highly regarded before they closed. But like most small company stocks, these funds all lagged behind the S&P 500 by a wide margin while they were closed.

That gives many of those funds decidedly mixed track records, with attractive returns over the last several years, but weak ones in the last year.

"You have to look at what is coming down the road, versus what's in the rearview mirror," said William D. Szustak, the executive vice president at Paramount Planning Inc., an Amherst financial planning firm.

The managers of the newly reopened small cap funds all argue that this is a good time to bring in new money because small company stocks have been out of favor for so long and battered so badly that there are lots of bargains for investors who have the cash.

"We see many promising opportunities in the small cap market," Preston G. Athey, the Price Small-Cap Value Fund's manager, told investors in a letter earlier this month announcing the fund's reopening. "We believe reopening the fund will enable us to add new investments without creating the need to sell existing holdings."

That's been a problem for some small cap funds. As investors gave up on small company stocks and redeemed their shares, it forced small-cap fund managers to sell some of their holdings to cover the redemptions. That put further downward pressure on small company share prices, which finally began a strong rally in early October.

Consider what's happened at the Oakmark Small Cap Fund. A year ago, it was one of the highest-flying small cap funds, and it stopped taking in new investors in June 1997 as its success caused its asset base to swell to more than $1.5 billion even before its second birthday last fall.

But the fund ran into some rough going this year, losing 40.5 percent of its value between its April peak and its October low as its shareholders started bailing out, with redemptions outpacing new investments from existing shareholders by $600 million. Those outflows, coupled with the declining value of the fund's holdings, caused its asset base to shrink to $618 million by the end of September.

So the fund reopened at the end of August, hoping the money from new investors would allow its manager to stop selling its holdings to meet redemptions and give it cash to snap up some of the buying opportunities he saw.

So far, the reopenings have worked out well, especially for small cap funds. The Russell 2000 has rallied by 28 percent from its Oct. 8 low and the S&P 500 is up nearly 21 percent.

How's that for good timing?

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