Funds That Deliver in Downturns

As markets sank in 2008, some top funds played defense. The portfolio managers held cash and avoided shaky stocks. The moves worked, enabling the funds to outdo competitors during the turmoil.

This year some of the cautious performers have been lagging. Worried about the outlook for the economy, the managers are still holding some cash and sticking with rock-solid stocks. That has held back returns as markets have climbed.

But shareholders of the conservative funds should not be discouraged. The cautious approach can help to stabilize portfolios. And by avoiding big losses in downturns, the conservative funds can deliver solid long-term returns.

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