Forester, Hussman Defy Market Meltdown

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The Dow Jones Industrial Average, having plunged 1,400 points over eight trading days, jumped 936 points on Monday, the best single-day gain in a quarter century. The rally, which stalled on Tuesday, was spurred by a globally coordinated sovereign recapitalization of the world's largest banks.

For investors who believe that Friday was the bottom of the market, here are the 10 best-rated open-end stock mutual funds based on risk-adjusted performance for the 12 months through Sept. 30. Each of the funds holds at least 50% of its assets in equities and is rated A+.

The most highly rated stock fund at the end of the third quarter was the Forester Value Fund (FVALX Quote). With a sector allocation of 19% pharmaceuticals, 11.6% food, 8.5% oil and gas, 5.9% insurance, 5.4% retail and 5.3% beverages, its portfolio is in a defensive position for this rough economy.

Forester Value's largest holdings include HJ Heinz (HNZ Quote), Kraft Foods (KFT Quote), Johnson & Johnson (JNJ Quote) and General Dynamics (GD Quote). The fund also has a small stake in Anheuser-Busch (BUD Quote) whose acquisition by InBev has a higher probability of success now that some banks funding the deal are receiving direct injections of new equity from world governments.

The second-best rated open-end stock fund is The Arbitrage Fund(ARBFX Quote), which attempts to find special situations including mergers, takeovers, buyouts or other liquidations that may present an opportunity. Some of the largest positions include Waste Industries USA (WWIN Quote), BEA Systems (BEAS Quote), Huntsman (HUN Quote) and Trane (TT Quote).

In third place, the Hussman Strategic Growth Fund (HSGFX Quote) rose 4.2% for the year ending Sept. 30 on investments in Johnson & Johnson, Amazon.com (AMZN Quote), Colgate-Palmolive (CL Quote) and Coca-Cola (KO Quote).