Fund name: Mairs and Power Balanced (MAPOX)

Objective: The objective of the Fund is to provide shareholders with regular current income, the potential for capital appreciation and a moderate level of volatility by investing in a diversified list of securities including bonds, preferred stocks, common stocks and other securities convertible into common stock.

Manager: Bill Frels, who has managed the fund since 1992. Mr. Frels is in his mid-60s and recently added a youngster, Ron Kaliebe, to co-manage the fund. Mr. Kaliebe is in his early 50s.

Opening date: March 17, 1961.

Minimum investment: $2500 for regular accounts, $200 for IRAs, but just $100 if you’re willing to set up an automatic investing plan.

Expense ratio: 0.84%, on an asset base of $131 million.

Comments: The argument for Mairs and Power Balanced is pretty durn straight-forward. The fund almost always beats its competitors (it has had above-average returns in 10 of the past 12 years), it has a great long-term record (top 7% among "moderate allocation" funds for the trailing 5- , 10- and 15-year periods), low turnover, high tax-efficiency, below average expenses, moderate risk, stable management. Not surprisingly, a pretty consistently five-star fund.

But no investors. The asset base here is just above "tiny" at $131 million. And while the asset base has been growing, it appears that about half of that growth simply reflects returns in the portfolio.

Why? Two factors: (1) Mairs and Power doesn’t spend money on marketing and doesn’t inflict a 12(b)1 marketing fee on their shareholders. And (2) unlike Mairs and Power Growth, Balanced is available in only half of the U.S. states. They are:

Those of us in the Midwest (except the South Dakotans) say, "hah! Poop on (almost) all of you Chardonnay swilling Easterners!"

About the only downside to Balanced as the core of a fairly conservative portfolio is the prospect of a management change. As I noted above, Mr. Frels is a bit older than 65 and the appointment of a co-manager might signal the start of a transition plan. That said, Mairs & Power has managed several transitions in the past without missing a beat. They’re pretty disciplined and have a unique focus: a large fraction of the portfolio are firms domiciled in Minnesota. They believe that they have a unique advantage in investing in such firms because they know them very well and Wall Street doesn’t. Both the discipline and the focus mitigate the risk of a stumble should Mr. Frels choose to retire in the reasonably near future.

Bottom Line: If you’re looking for a core holding, especially for a smaller portfolio where the reduced minimum will help, and you live in one of the 22 states where it’s offered, this has to be on the short-list of the most attractive balanced funds in existence.