James Moore has been around the block a time or two. He’s made money, lost money, joined firms, left firms, and, by his count “trained hundreds of traders” over the years. Today his Triumph Investment Master Fund is ranked no. 1 among fund of funds by The Barclay Group for the past 36 months, with a compound record of 22.6%, and he’s having a terrific time.

His fund is the sole public vehicle of TIF Fund Management, reconstituted on the foundation of DGM Investments, which Moore founded in 1978. DGM was closed in 2000 when fraudulent activity on the NY Futures Exchange cost the firm, and others, millions of dollars, which they are still trying to recoup.

Adjusting for that calamity (a hit of 30% before likely restitution) and for a successful private equity investment that skewed results for one share class, the composite record of Mr. Moore’s fund and its predecessor trust shows an annual return of 28.4% from its first full year, 1990, through 2003. The worst month was January 1992 (down 11.7%); the standard deviation (a measure of volatility) is a fairly hefty 13.2.

This year through June the fund was up 6.7%; estimated gains through July are 5.83%. Not bad, given the lackluster results being reported by most funds. How does he do it?

Certainly not by forecasting the direction of the market – an activity Mr. Moore equates with committing financial suicide. Rather, the fund has gathered a team of 21 experienced dealers, many of them floor traders and market makers, who run a portion of Triumph’s funds in joint ventures, much like the operations of a fund-of-funds.

The difference is that there is no duplication of fees. The traders are partners in the enterprise, and all have money invested in the joint ventures. Of course, with an annual management fee of 2% (which Moore acknowledges could come down as the fund grows) and performance fee of 25%, the investors are being charged plenty as it is.

Mr. Moore has built his stable of trading relationships over many years. His background includes producer stints at E.F. Hutton, Conti Commodities, and Dean Witter. In the mid-1970s, he was responsible for building a sizeable futures and options business at Shearson Hayden Stone, including the development of some early futures funds.

In 1978 he went out on his own, founded DGM, and developed some successful futures funds, which were subsequently sold in 1983. He has

worked with a number of firms, including Merrill Lynch, looking to build derivatives funds operations, and in the late 1980s ran Thomson McKinnon’s Futures Management department.

In 1989 Moore started up the first derivatives fund seeking to take advantage of exchange membership, which is one of the underlying benefits of the fund’s structure today. Those advantages include reduced transaction costs and margin requirements and increased interest income.

Because of the rules governing most exchanges, the fund is usually the only outside account for most of the traders, making its position somewhat unique. This relationship also reduces the possibility of conflicts of interest.

The fund’s 21 traders employ 23 different strategies, but the portfolio is dominated by commodities, options, and index holdings. Perhaps 35% of activity relates to equities and equity options; the remainder involves debt instruments, commodities, and options.

Mr. Moore spends his time analyzing the traders’ results, on a daily basis. These are short-term players looking for market discrepancies, not investors. Mr. Moore is convinced that the best way to make money is to make a little at a time, consistently.

Though the portfolio turnover is lively, trader turnover is not. The fund may lose a trading partner every now and then, but it is usually from retirement. Mr. Moore spends six months to two years looking over a trader’s record before bringing him on board, and he credits that exhaustive review for having made few, if any, bad choices.

His requirements are fairly simple. Each trader must meet two criteria. He or she must have 15 to 20 years of experience, and also be able to provide at least five years worth of audited statements. Beyond that, Mr. Moore attempts to mete out his funds so that risk is reduced by useful diversification.

In other words, he does not want the various strategies to cancel each other out. Rather, he studies performance to determine that results are not random and that the ups and downs do not correlate. His greatest concern is that all accounts get hit simultaneously.

He makes allocation adjustments on a monthly basis, tweaking the numbers according to who is performing well and who is not. Since the trading game is short-term, there is no “waiting to see if it works out.” Today is when the report card is in.

Assisting him is a woman who had worked in quantitative analysis at Exxon. She helps review the daily reports the firm receives. The fund has employed Value At Risk analysis since 1986. Since all investments are exchange-traded, there is nothing murky about where the fund stands at the end of each day.

Mr. Moore does not think there are any other funds operating along the same lines as Triumph today. Several have tried to follow the floor-trading model, but none has succeeded. Mr. Moore credits his seemingly unique success with really understanding the trader mentality. He should. His wife is a trader, and apparently quite a successful one.

Mr. Moore does not have an official goal for the fund. Ideally, he would like to earn 12% to 15% per year for investors, and keep volatility below 3% or 4%. His ambitions are modest; he doesn’t aspire to have the biggest fund in town, but rather aims to take good care of clients and employees with his “inch by inch” approach to investing.

In his view, running the Triumph fund is like playing golf. He competes against the course, not other players. He recognizes that there is always someone who is going to outperform him in any given time frame. The goal is to have consistent returns, with reasonable risk.

Today the Triumph Fund is small – with less than $40 million. Mr. Moore manages more than $100 million in a similar trust, which is not open to investors. The fund is registered with the National Futures Association and the Commodities Futures Trading Commission; auditors review the fund’s statements each month. Mr. Moore wants to keep things clean and simple.

Mainly, he wants to preserve capital and deliver reasonable returns for his investors in an uncertain time. Maybe this accommodating approach comes from matriculating from Cornell’s School of Hotel Management. Or perhaps it’s the result of 37 sobering years on the Street. Either way, at the moment, it appears to be working.