(MONEY Magazine) – American Century has long been a leader in cost control, but it wasn't always a leader in performance. In 2001 the funds' huge holdings in tech led to big losses, and many American Century shareholders bailed out. The firm has since beefed up its analyst staff and has fine-tuned its investment process to include some risk controls and more fundamental research.

The comeback strategy worked. Today 65% of American Century equity funds rank in the top half of their categories for the three years ending July 20, according to the fund trackers at Morningstar. The firm's biggest fund, Ultra, has outpaced 80% of its peers. The company is also doing well with some fairly conservative funds like Equity Income. One sticking point: Giftrust, a once-popular fund that locks its shareholders in for 18 years, has remained a laggard.

"American Century has become a success story," notes Russel Kinnel, Morningstar's director of research. "But so far not many investors have noticed." That may not remain true for long. --PENELOPE WANG