The American Growth Fund, Denver, plans to launch a bundled 401(k) product targeting small plans by the first quarter of 1996.
The fund will team up with other fund companies and a third-party record keeper and administrator.
The $100 million American Growth Fund has a 37-year track record under Robert Brody, founder and president.
Mr. Brody plays by his own rules, shifting in and out of entire sectors, holding as few as 25 stocks and sitting on cash in bear markets. The fund owns mainly large-capitalization growth companies he considers high quality.
The fund's turnover ranges from 50% in some years to 170% when a sector shift occurs. This is one of those years. The fund has sold its entire 20% allocation in technology stocks, unloading such names as Dell Computer Corp., Micron Technology Inc. and Cisco Systems Inc.
"That group makes me a little nervous. It's had a big upward move. It may start to go down even a year before earnings start to turn down," he said.
The fund's cash stands at 30%, but Mr. Brody expects to deploy it down to 3% within a month - one of the benefits of being a small fund.
He is adding to existing positions in non-cyclicals and buying new names like Woolworth Corp.
The fund's biggest sector weighting is in financial services, including regional banks, many of which have been taken over in recent years.
Another key sector is airlines, which Mr. Brody accumulated earlier this year when his earnings estimates far exceeded those of Wall Street analysts. UAL Corp. is his favorite airline stock.
Mr. Brody prides himself on outperforming in down markets. Not surprisingly, he has lagged the Standard & Poor's 500 Stock Index this year.
In the one-year period ended Sept. 30, the fund returned 16.5%, vs. 29.75% for the S&P. For three years, American Growth returned a compound-annual 17.3%, vs. 14.98% for the S&P; for five years, it returned 16.6%, vs. 17.23% for the S&P.
American Growth's 37-year return, a figure few funds can provide, is a healthy 11.2%, vs. 10.6% for the S&P.
"I don't try to predict corrections, only bear markets," Mr. Brody said, noting that conditions still look good for stocks.
Still, he wouldn't be surprised to see a "normal correction" of as much as 600 points between now and the turn of the century.