The two guys who manage the Wasatch World Innovators Fund [ticker: WAGTX] go way back together, but that doesn't mean they agree on everything. Case in point: Amazon. The senior portfolio manager thinks the stock is too rich. The junior manager sees a good growth story, despite the already-high valuation.

Such arguments may seem surprising given that the senior fund manager, Sam Stewart, is a founder of Wasatch Funds, and has been Wasatch Funds president since 1986. But the brassy co-manager willing to challenge the boss is none other than his son, Josh.

"We argue a lot about investment decisions," says Sam Stewart, 70. "But we work together a lot too. A lot of times, it's about valuation. Josh is more focused on growth than I am."

The solution the two men came up with was to break the fund into two tranches, with each of them taking primary responsibility for one of them. Father Sam's tranche is currently worth about $190 million, while son Josh is managing a tranche of about $145 million."

"Setting up two tranches magically defused all the tension," says Sam, who worked as a chief financial analyst for the Securities and Exchange Commission and later as a professor of finance at the University of Utah before founding Wasatch. "Since we did that, managing this fund has been a lot more enjoyable. Our exchanges are purely on a rational level, not an emotional one."

Says Josh, "Now when we disagree, I just buy some of the shares we disagree on." He adds, "Dad has a steady hand on the tiller. He can calm me down. For example, say a stock drops 20%. What do we do? Sell? Double down on our investment? Dad's very calm about issues like that."

In fact, although the two men each have the ability to buy and sell shares in their own tranche, the two tranches are not all that different in the final analysis. "We work together a lot," explains Josh, "so I'd say that about two-thirds of the holdings in the two tranches are the same, and maybe one-third is different."

Sam says this arrangement is a good way to vet new ideas. "The names that are different in the two tranches tend to be new to the fund."

On the big issues, they seem to agree. For example, on the basic approach of doing bottom-up analysis, as opposed to macroeconomic or sector analysis in allocating the portfolio. Or the big one: shifting the fund from a pure tech fund to something broader. "About three years ago when the fund was called the Wasatch Global Science and Technology Fund, we decided it was too sector-focused for people to be able to think about it as a long-term investment," says Josh, who joined Wasatch as a health care and technology industry analyst in 2006, and who started working at the World Innovators Fund as an analyst in 2010. "We decided to make it more global and to focus not just on technology, but also on the world's best growth companies-but they have to all be companies that are innovative."

For example, the fund's top two holdings are Apple and Google-at 4.42% and 3.91% of the portfolio, respectively. Apple is "gaining market share like crazy," notes Sam. And Google is outpacing the market and growing faster than the overall Internet advertising market, adds Josh.

Other top holdings, such as MasterCard (3.77% of holdings) and Visa (3.71%), don't exactly fit in the tech category, but they are growing and grabbing market share globally. The fund's fifth biggest holding, Abcam PLC, a relatively small British Internet-based seller of antibodies used by scientists for testing, has adopted Amazon's online reviews approach, with scientists writing in to offer comments about the products they are buying from the company.

"We're an all-cap fund," says Josh, "which opens up a lot of companies for us to consider."

The strategy seems to be working. Year-to-date the fund is up 15.7%, according to Morningstar. Over the last 12 months, it is up 18.8%. The annualized three-year return, which covers the period since the fund's focus was shifted, is up 19.8%.

Sam, who earned a Ph.D. in finance from Stanford University, says he is grooming his son Josh to eventually take over management of the fund's entire portfolio. "I'm healthy and I love coming to work, but I am 70, and I'll be retiring at some point, so I see this as nurturing and training Josh about the things I have come to believe are important."

There is always the concern about nepotism, the father acknowledges, but he says, "You know, in this business, if you hire a relative just because they're a relative, you're dead. Your NAV is published every day, and Lipper publishes your performance. You're in a fish bowl all the time. There was a lot of surprise when I hired Josh here, and he has had to prove himself, but he's done that."

Josh notes that he had not planned on going into the family business. "Originally, when I went to college, I majored in French literature and math," he laughs. Then I went to New York City, and started working as an intern at Inc. Magazine, with the idea of becoming a writer. Later, though, the family influence showed itself, and he got a job at Sidoti & Co., an investment firm with a small-cap focus. He's not shy about saying he used his father's name to get the interview. "Peter Sidoti loved the idea of relationships," recalls Josh. "He felt that if he can have some connection with the people he hires, that's good, he knows something about them." Josh had three to five months to prove himself on the job, he says. He ended up working at Sidoti for three years, primarily as a health care industry analyst. But he wanted to move to the buy side.

"I looked around in New York, but then I decided to play the hand I was dealt," he says. "I went back and applied to Wasatch, and I've been here ever since."

Even so, actually working with his dad was still not his plan. "That was more of an opportunistic thing," says Josh. "My wife was going to a one-year master's program at the London School of Economics. I wanted to try and go there, too, so I asked to relocate. I also wanted to be a senior analyst and maybe run some money. Dad was kind of new on this fund, and we got to talking about how I wanted to work on a global fund. It seemed like, hey, if we could take this on and make it the way we wanted it to be it could be fun."

Not at first. "We started butting heads right away," says Sam. "I think those parent/child issues got played out over stock picks."

Now the two work together very closely-and effectively. So do they hang out together off the job? "We're different generations," laughs Sam. "But we have a lot of family get-togethers. Josh has a couple of my grandchildren, so it's a great motivator to get together."

Dave Lindorff is a freelance writer and long-time contributor to the magazine.