Mike McGregor

Fear of failure drives many mutual fund managers to spread their bets widely. Actively managed U.S. stock funds hold an average of 152 different companies, reports Morningstar. World funds average 225.

The stewards of the funds on the following pages are different. They invest in 50 companies or fewer, following their best ideas with conviction—and to great success. Each fund's five-year return has beaten those of more than half of the funds investing in similar stocks. For the three funds that are at least a decade old, the same is true of their 10-year returns. Follow the managers' advice and you may prosper too.