'Go-Anywhere' Funds Beat Gyrating Market

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

The Managers AMG FQ Global Alternatives Fund(MGAAX Quote) and TIAA-CREF Managed Allocation Fund(TITRX Quote) are among the most attractive mutual funds to own because their go-anywhere policy gives managers investing flexibility.

With an initial rating of A, or "excellent," the Managers AMG FQ Global Alternatives Fund takes both long and short positions in global equities, fixed-income securities and derivative contracts on a country-by-country basis to make money no matter which way the overall market moves. It's the highest-ranked fund, according to TheStreet.com Ratings' newly initiated coverage of 33 open-end mutual funds that accrued a track record of three years of risk and performance data by the end of March. Four of the funds received "buy" ratings.

The second-highest ranked fund in our new coverage is the TIAA-CREF Managed Allocation Fund, which is allocated to 58% equity, 9% government debt, 13% corporate debt and 20% mortgage assets. This fund is ranked "good."

The FQ Global Alternatives Fund's philosophy is that market-beating returns can be generated by identifying recurring market inefficiencies due to the time lag of information and other factors whereby investors give too little or too much weight to information. As the inefficiencies cycle through phases of expansion and contraction, excess returns may be garnered. The fund is bullish on the U.S. market, with a large position in the SPDR Trust Series 1 (SPY Quote), the exchange-traded fund tracking the S&P 500 index.

The last two "buy"-rated funds are more conventional equity funds, each holding about 95% stocks, most of which are U.S. companies. The Nuveen Santa Barbara Dividend Growth Fund(NSBAX Quote) has holdings of Coca-Cola(KO Quote), International Business Machines(IBM Quote) and Yum! Brands(YUM Quote). Large holdings of Sit Dividend Growth Fund(SDVSX Quote) include Johnson & Johnson(JNJ Quote), Verizon Communications(VZ Quote) and Procter & Gamble(PG Quote).

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