Balancing Act Gets Tougher for Funds

But Joan Sabella, portfolio manager of the MainStay Balanced fund(MBAIX Quote), says interest rate forecasting isn't part of her brief, which is to stick to investors' long-term objectives.

She keeps the portfolio diverse, with a mix weighted toward investment grade corporate bonds and augmented by agency and government bonds, and a range of stocks that ensures no single company makes up more than 1.2% of the fund's total assets.

"Sometimes in this environment, there's a lot of concern, and the individual investor may do things that a balanced fund manager does not," she says. "The manager is in it for the long term, so investors don't have to worry about that. They're looking for that 60-40 strategy and buying that."