Thyra Zerhusen of ABN AMRO Mid-Cap Fund

ZERHUSEN: They fall between the cracks. Most stock holders focus on large-cap and small-cap stocks, so the mid-cap segment is somewhat overlooked and less efficient than other areas. You can find mid-cap companies that are growing faster than large-cap companies and have better liquidity than small caps. Also, it's easier to get access to managements of mid-cap companies than of large-cap companies. I talk to the CEOs of some of my mid-cap holdings.

Also, I often find companies that are not well covered by Wall Street analysts. I owned a stock that wasn't covered by any Wall Street analysts — Wallace Computer — that was taken over this year.

S&P: What is your turnover?

ZERHUSEN: I like to have a turnover rate of about 45% and aim for no more than 35 holdings. I do a lot of my own research, so I focus on a small number of companies. I don't want to have more than a 6% position in any one stock. Once it gets to 5%, I trim it.

S&P: The fund tends to be more volatile than its peers?

ZERHUSEN: Several holdings have been taken over, so I had to reinvest the money. Some of my new positions initially went down.

S&P: Why does the fund have good long-term returns?

ZERHUSEN: I can live with a stock that has one bad quarter. I always ask where could a stock be one year from now.

S&P: Would you mention a long-term holding that you particularly like?

ZERHUSEN: I've owned Amer Power Conversion (APCC) for a long time, but sometimes the stock runs up, so I periodically trim my holdings.

S&P: What are the largest sectors in the fund?

ZERHUSEN: Consumer discretionary is over 25% of the fund. My holdings in that sector include Readers Digest, Reuters, and Borg Warner (BWA). Information technology is over 20% of the fund. Stocks in that sector have risen, so I've been trimming some positions. I own Unisys Corp. (UIS), my biggest holding, Progress Software (PRGS), and Andrew.