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Keep your eye on these ambitious newcomers.

Four of the nine offices at Alpine Management & Research's 37th-floor headquarters are empty. The walls are bare, waiting for real estate companies (which Alpine invests in) to send photos of their properties. "They're free," notes Marc Halle, one of the firm's two principals. And the desks in the midtown Manhattan office came from Long-Term Capital Management, the hedge fund that foundered during the recent unpleasantness.

Despite the catch-as-catch-can furnishings--and the lousy year for most mutual funds--Alpine took the bold step of opening a new fund in December, hoping to attract enough assets to fill the empty offices and secondhand desks.

Only 165 funds started in the first half of 1998, and just seven new funds opened from July to early November, according to Morningstar Inc. In 1997, by contrast, 562 funds opened their doors.

This year's newbies are worth a look. Two recent studies, one conducted by Charles Schwab and the other by Kobren Insight Group, support previous findings that rookie funds tend to surpass their elders. The biggest winners were small-company funds. Kobren's analysis found that they trounced their more established peers by an average of 6.9 percentage points in their first year.

New funds have a number of things going for them. They start with a clean slate: Managers aren't saddled with stocks that aren't their favorites. Moreover, because they are small, new funds can buy and sell a stock without roiling its price. That's especially important in the case of small-company funds, where even relatively small transactions can depress the price of shares being sold or increase the price of shares being bought. A new fund's sponsor is also eager to rack up good numbers to attract more money, so it's likely to get the firm's very best ideas. On the other hand, all new funds share one big drawback: By definition, they possess no record you can examine, which makes them tricky to size up.

All six of the funds in this story are run by managers with first-class track records. We shied away from funds with sales fees. With one exception--Alpine Realty Income & Growth--we avoided funds that specialize in one sector of the economy. Finally, we gave a slight nod to funds that invest in small companies. The half-dozen funds that follow are good bets not only to have sparkling rookie years, but to be worth hanging on to for years to come.

Alpine Realty Income Growth

OPENING IN DECEMBER 1998 (888-785-5578)

Sam Lieber has an ideal background for investing in real estate stocks: He spent the first years of his working life in real estate. Then in 1985 he became a real estate stock analyst for the Evergreen funds.

Last March, Lieber and co-manager Marc Halle (who also got his start in real estate) left Evergreen and changed the name of their domestic fund to Alpine U.S. Real Estate. Despite a horrid 1998 (the fund lost 26% to November 2), Alpine ranks in the top 20% of real estate funds over the past three years and is the top-performing such fund over the past five years.

After 1998's disappointing performance, Lieber, 42, and Halle, 37, decided to open a conservative fund that would invest almost exclusively in high-yielding real estate investment trusts (REITs). While U.S. Real Estate concentrates on growth and has a negligible yield, Income & Growth focuses on yield (expected to be about 6%). "We're going to invest in rock-solid, safe stocks with high dividends," Lieber says.

To determine what individual REITs and their properties are worth, the pair talk to and visit real estate companies and private investors, then crunch the numbers. Says Lieber: "We focus on what a REIT is worth, what it will be worth next year, and what management can do to add or detract from value."

UAM Clipper Focus

OPENED ON SEPTEMBER 10, 1998 (877-826-3863)

In years past, when the Pope was preparing to canonize a saint, he turned to the office of the Promoter of the Faith--commonly known as the Devil's Advocate--to try to spot flaws in the argument for canonization. The Clipper funds use a similar technique to pick stocks.

When one of the fund's four co-managers (all of whom have been with parent Clipper fund for more than a decade) becomes interested in a stock, he finds another co-manager to work with him. For up to a month, the two analyze the stock. One looks for reasons to buy it; the other, the devil's advocate, looks for reasons not to invest.

At the end of their research, they try to reach a conclusion and then discuss their findings with James Gipson, the fund's chairman. "Gipson says two and a half people have to agree on any stock before it goes into the fund," says co-manager Bruce Veaco. Most stocks are rejected. Each Clipper fund usually owns just 15 to 25 stocks and sells only about 30% of its holdings annually.

Clipper Focus will mirror its older sibling with one important difference: It will be totally invested in stocks at all times, whereas Clipper fund builds a large cash position (recently more than 40% of assets) when it cannot find stocks that meet its specifications. Clipper hunts for large companies that dominate their industries, are in growing fields and have strong managements. The managers won't buy a stock unless it's selling for at least 30% less than the entire company's value in a private sale.

Clipper fund, begun in 1984, has produced returns that place it in the top 10% of long-term-growth funds over the past three and five years, with 30% less volatility than Standard & Poor's 500-stock index. Clipper Focus should do better than its older sibling in a good stock-market environment but suffer bigger setbacks in downturns.

Forward Small Cap Stock

OPENED ON OCTOBER 1, 1998 (800-999-6809)

In late 1994 Irene Hoover, an analyst and money manager for 19 years, became the first manager of Jurika & Voyles Mini-Cap. During the next three calendar years, the fund's returns were better than those of the Russell 2000, an index of stocks of small companies, by 23.8, 15.6 and 1.5 percentage points, respectively. By September 30, 1997, it had the best three-year record of any diversified stock fund.

The next day, Hoover, 57, stunned her investors by parting company with Jurika & Voyles. Hoover says the company wanted her to own fewer stocks, which she thought was unwise because she thought the market was overvalued. Moreover, she says, "I resigned because I wanted to be on my own."

Hoover has now launched her new fund. Like her old fund, Forward Small Cap Stock invests in high-quality businesses selling at relatively low prices. She looks for small companies that are leaders in their fields and have high profit margins, solid sales growth and seasoned managers that own a good chunk of the firm's stock.

She also looks for a catalyst that will spur future growth. For instance, she owns Granite Construction--which builds roads, dams and airport runways--partly because she thinks governments will increase spending to rebuild their infrastructure.

Hoover anticipates holding stocks an average of one year, and she expects her stocks to have an average market value (share price times number of shares outstanding) of roughly $750 million. Hoover says she can manage as much as $1 billion using her approach (her firm has only $74 million under management now).

Gabelli Westwood Mighty Mites

OPENED ON MAY 11, 1998 (800-422-3554)

Marc Gabelli began visiting his father's office regularly when he was just 8 years old. "I did everything from stuffing envelopes to filing annual reports from companies," says Gabelli. "It has been great working with my father. I guess if someone's father were a carpenter, they'd be around the carpentry shop a lot." Gabelli recalls buying two stocks as a kid: Tonka, the toy-truck maker, and Binney & Smith, which makes Crayola crayons. He used the profits to help buy his first car.

Now 30, Gabelli has been on the payroll for five years. And together with two other co-managers, he and his father, Mario, have started a new fund, Mighty Mites. The name is flamboyant, as are other endeavors involving Mario Gabelli. (Mario christened another fund Gabelli Global Interactive Couch Potato.)

But don't let the funny names fool you. Mario, 55, has spent decades honing his value-investing techniques, which focus on figuring how much an entire company is worth to an outside buyer and then buying its stock only if it can be had for roughly half that amount. Many of the elder Gabelli's picks become takeover targets. Gabelli also has a penchant for media, entertainment and telecommunications stocks.