Alexion has been restructuring, with layoffs and a planned move of its headquarters from New Haven, Conn. to Boston. An internal investigation uncovered improper sales practices, but Ms. Starke said she viewed the company’s troubles as transitory. “They have a growing drug pipeline,” she said, “and the bad news didn’t affect the longer-term fundamentals.”

The distinctive nature of biotechnology companies’ product pipelines is a draw for Ms. Starke. “The companies are typically not competing against each other — they can all be addressing different diseases,” she said. The health care sector, which includes biotechnology, recently accounted for about a third of her fund’s assets — about twice as much as her average Morningstar peer.

Ahead of the Market

How three of the better performers of the third quarter of 2017 fared against the market — and against their peer groups of funds.





Value Line Larger

Companies Focused

Akre Focus Supra Institutional

Value Line Larger

Companies Focused

Akre Focus Supra Institutional

Akre Focus Supra Institutional

Akre Focus Supra Institutional

Value Line Larger Companies Focused

Value Line Larger Companies Focused




Ms. Starke’s fund, which has a retail expense ratio of 1.15 percent, returned 8.1 percent for the third quarter, compared with the 4.48 percent returned by the Standard & Poor’s 500.

The managers of the Akre Focus Fund share Ms. Starke’s highly focused approach to investing, but take it even further. Their fund lately held only 23 stocks.

John H. Neff, one of the three portfolio managers, said that he and his two colleagues, Charles T. Akre Jr. and Thomas Saberhagen, liken their investment process to a three-legged stool. They seek businesses with strong competitive advantages, skilled and honest management and promising opportunities for reinvestment.

“Our job is to be as discriminating as we can in identifying these three-legged stool businesses and to be discriminating in what we pay for them,” Mr. Neff said. If stocks do not meet those criteria, the fund will sometimes let cash build up. “If we’re not seeing opportunities that meet that hurdle, it sits.”

A theme in the portfolio is what Mr. Neff called “bottleneck” or “toll-bridge” businesses: outfits that operate at a choke point in the economy and profit from their position.

Consider Mastercard, a top recent holding. The volume of electronic transactions, which Mastercard processes, continues to grow, but cash and checks still prevail worldwide, Mr. Neff said. That represents a hefty opportunity for handlers of electronic payments. “Whatever you buy and wherever you buy it in the world, we own a business that has improving odds of being involved,” he said.

Mr. Neff said that another of the fund’s top holdings, Moody’s, the credit-rating agency, likewise stood athwart a toll bridge: Its ratings are critical in the issuance of bonds and other debt securities. The biggest raters — Standard & Poor’s is the other — came under fire after the financial crisis because some of the subprime mortgage bonds they classified as investment-worthy ended up collapsing, and some policy makers have called for greater competition in the industry. So far, though, Moody’s and Standard & Poor’s continue to dominate, and Mr. Neff said that he and his colleagues do not foresee that changing soon.

The Akre fund, which has a retail expense ratio of 1.34 percent, returned 9.99 percent in the third quarter.

Stephen M. DuFour, manager of Fidelity Focused Stock Fund, also restricts his fund’s total holdings. Officially, the fund can own as many as 80 stocks, but Mr. DuFour said he aimed for half that number. “With 40, you have enough names to diversify,” he said, “but you also get bang for your buck.”

Mr. DuFour has latelyheard that bang coming fromtechnology stocks, which accounted for 40 percent of the fund at September’s end. In picking stocks, he said, he does not heed sector classifications. “I’m sector agnostic,” he said. “My overweights change based on where I find good investments, and I see great stuff in tech now.”

He added he did not see his technology investments as bets solely on computers and the web. PayPal, for example, was a top recent holding, and the company is an innovator in the technology for handling online payments. “But they also do loans and credit cards,” he said.

The growth in electronic payments is one of the three themes that unify the fund, he said. The others are the internet, especially the emergence of artificial intelligence, and exchanged-traded funds.

Mr. DuFour said that working for Fidelity, one of the country’s largest asset managers, had given him insight into the upsurge in E.T.F. investment. Fidelity, like its industry counterparts, has had money flow out of its actively managed funds and into its passively managed ones, including E.T.F.s, he said. (An E.T.F., like a traditional index mutual fund, often tracks an index.)

“As I look for ways to play that, it turns out that people who own the indexes are in a very advantageous position,” he said. “So, in my top 10, one of the names that shows up is Standard & Poor’s,” which is also a leading creator of indexes. Every E.T.F. built around, say, the S.&P. 500 must pay Standard & Poor’s for theright to use the index.

Mr. DuFour’s fund, which has a retail expense ratio of 0.62 percent, returned 7.75 percent in the third quarter. Mr. DuFour has managed the fund since 2007. Over that time, it has returned an annualized average of 8.41 percent.

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