Q. I am a disgruntled Bank of America shareholder. Is there reason to expect improved results going forward?

A. The question for shareholders is how quickly it can put past mistakes in the rearview mirror, significantly improve its controls, and use its enormous size to greater competitive advantage.

It became the biggest U.S. bank following acquisitions of Countrywide Financial and Merrill Lynch, but is likely to slip into second place in assets in coming months behind JPMorgan Chase. Sluggishness stems from bad loans from acquisitions and from lax practices in the past.

It agreed to pay $8.5 billion and set aside $5.5 billion to settle claims by institutional clients that bought toxic mortgage securities. That settlement, under investigation by the New York attorney general, helped lead to a record $8.8 billion loss in the second quarter.

Meanwhile, an arbitration panel ordered a Merrill Lynch clearing unit to pay $63.7 million in damages to a California hedge fund manager for unexpected margin calls that caused losses.

Bank of America (BAC) shares, included in the Dow Jones industrial average, are down 23 percent this year following last year's 11 percent decline. The firm faces an expected hit from a settlement between banks and the 50 state attorneys general over mortgage-servicing practices, as well as additional litigation and ongoing federal scrutiny.

Nonetheless, this consumer and small-business bank is dominant in growing regions, its deposit base provides it with low-cost funding, and management says it has ample capital. It operates in all 50 states, the District of Columbia, and more than 40 countries.

Improving operations and pulling together disparate business units is key. Terry Laughlin, its negotiator of settlements for bad loans and foreclosure, has been named chief risk officer, starting late in the third quarter.

Consensus analyst rating of Bank of America shares is between "buy" and "hold," according to Thomson Reuters, consisting of eight "strong buys," nine "buys" and 14 "holds."

It has potential to attract more affluent customers. Notably, on Barron's list of "America's Top 100 Women Financial Advisers," Merrill Lynch Wealth Management placed 33 advisers and two of them in the top 10.

The bank received the highest score for consumer data safety among top U.S. card issuers for the fifth consecutive year in a study by Javelin Strategy & Research. It is the third-largest U.S. credit card issuer based on money spent using its cards.

Earnings are expected to increase 22 percent this year and 61 percent in 2012, according to Thomson Reuters. Five-year annualized growth rate is forecast as 8 percent, compared with 9 percent expected for the banking industry.

Q. What is the outlook for PRIMECAP Odyssey Growth Fund?

A. This contrarian fund is run by five experienced managers, each granted autonomy to make buy-and-sell decisions for a percentage of its assets.

The managers believe in their fund: Four hold more than $1 million of their own money in it, while the fifth holds between $500,000 and $1 million. That's a good sign for shareholders.

Right now the fund is heavily into small, medium, and large health care stocks.

The $2 billion PRIMECAP Odyssey Growth Fund (POGRX) is up 27 percent over the past 12 months to rank at the mid-point of large growth funds. Its three-year annualized return of 9 percent places it in the top 10 percent of its peers.

"PRIMECAP Odyssey Growth is a growth fund but also goes against the grain of the market, at least in the short term, and this has worked out well for it," says David Kathman, mutual fund analyst with Morningstar Inc., in Chicago. "It looks for temporary valuation issues that can be out of sync with the market but have longer-term prospects."

The fund is diversified enough to be a core investor holding, Kathman says, and since it fits on the growth side of the equation, it could be held in conjunction with other funds.

Holdings are often clustered among favorites of each manager, which means there can be outsized sector weightings. Eight analysts assist. The fund's small asset base permits it to emphasize mid- or small-cap stocks. Firms with high unit growth, strong balance sheets, and good business models are favored.

More than one-third of assets are currently in health care, with smaller concentrations in hardware and software. Top holdings were recently Roche Holding AG, Amgen Inc., Seattle Genetics, Immunogen Inc., Dendreon Corp., Altera Corp., Cepheid, Google Inc. and Medtronic Inc. This "no-load" (no sales charge) fund requires a $2,000 minimum initial investment and has an annual expense ratio of 0.68 percent.

Q. Please explain how TIPS work. I'm thinking of investing in them

A. They can make sense for a portion of an individual's portfolio. Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation and are backed by the full faith and trust of the U.S. government.

The principal of TIPS increases with inflation and decreases with deflation as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted or original principal, whichever is greater.

They are issued in terms of five, 10, and 30 years with a minimum purchase of $100. They pay interest twice a year at a fixed rate and can be held until maturity or sold before maturity.

"TIPS can be purchased directly from the Treasury (www.treasurydirect.gov) if you set up an account," explains Mckayla Braden, senior adviser in the Treasury Department's Bureau of Public Debt, in Washington, D.C. "You can also buy through your bank or broker through either competitive or noncompetitive bidding."

TIPS also are available in a number of mutual funds and exchange-traded funds (ETFs) that invest in a portfolio of different durations.