Best Funds for a Cautious Market Re-Entry

The top dog among domestic balanced funds, the Greenspring Fund(GRSPX Quote) sports a truly balanced portfolio of 11% cash, 55% stocks, 14% bonds and 20% convertible securities. But its style is a bit more aggressive than a run-of-the-mill balanced number.

"The fund invests in stocks that are believed undervalued at the time of purchase and special-situation bonds that have the potential to provide both capital appreciation and income," according to Greenspring's stated objective. "The fund may also invest in companies in the process of financial restructurings or liquidations."

GRSPX's portfolio selections, which include FTI Consulting(FCN Quote) and Suncor Energy(SU Quote), generated a gain of 3.5% in August and 7.6% annually over the past three years.

Like many funds that focus internationally, the No. 1 global balanced fund, Ivy Fund-International Balanced(IVBAX Quote), has been having a difficult time in recent months. Although it has returned 6% annually over the past three years, it is down 7.8% over 12 months and tumbled 2% in August.

IVBAX was recently 23% in cash, 56% in stocks and 20% in bonds, with major equity holdings in Sanofi-Aventis(SNY Quote), France Telecom(FTE Quote) and ING Groep(ING Quote).

Among convertible bond funds, the leading performer for August, the Vanguard Convertible Securities Fund(VCVSX Quote), has grown at an annualized 7.7% over the past three years, but has stalled since August 2007. As expected, considering its heritage, VCVSX's holders are levied the lowest expense ratio -- a slender 0.77% -- of the five hybrids on the list.

VCVSX's major holdings include convertible bonds in Gilead Sciences and Teva Pharmaceuticals.

"HYBRID FUND" HIDEAWAYS: APPROACH WITH CAUTION
"HYBRID' OBJECTIVE & AUGUST AVG. RETURN (%)	TOP-PERFORMING FUND NAME, TICKER & TheStreet.com RATINGS GRADE	TOP FUND 1-MO. TOTAL RET'N (%)	TOP FUND'S 12-MO. RET'N (%)	FUND'S 3-YR. ANN'L RET'N (%)	TOP FUND'S YIELD (%)
Asset Allocation - Domestic: -0.12	1st Source Long/Short (FMLSX) A+ *	3.37	5.43	8.25	1.28
Asset Allocation - Global: -1.25	UBS Dynamic Alpha A (BNAAX) C	2.94	-3.42	2.57	0.14
Balanced - Domestic: 0.60	Greenspring Fund (GRSPX) A+ *	3.53	3.72	7.60	1.58
Balanced - Global: -2.07	Ivy Fund-International Balanced A (IVBAX) B-	-1.99	-7.77	5.96	6.11
Convertible: -0.32	Vanguard Convertible Securities (VCVSX) B *	0.78	-0.78	7.73	2.70
* No initial charge on purchase of shares. Data as of 8/31/2008. Source: TheStreet.com Ratings. For an explanation of our ratings, click here.