Dollar Set to Rally as Stocks Stagnate

SANTA MONICA, Calif. (TheStreet) -- David Wright, manager of the Sierra Core Retirement Fund(SIRAX), says the value of the dollar could skyrocket as investors flee riskier assets.

The $246 million fund has returned 34%% during the past year, trailing the 42% advance of the S&P 500 Index but outperforming the 0.9% gain of the Barclays Capital Aggregate Bond Index. The two-year-old Sierra Core portfolio holds shares of mutual funds run by outside companies, including Putnam Investments, Fidelity Investments and PIMCO.

Welcome to TheStreet's Fund Manager Five Spot, where America's top mutual fund managers give their investment views through five fast and furious questions.

Are you a bull or a bear?

Wright:Sorry to say, but we are bearish. The economy is suffering from deflation and the Federal Reserve and Obama administration are trying hard to revive it, but so far, there are no signs of a self-sustaining recovery. Sentiment has gotten back to the dangerous levels we saw in summer and fall 2007. The next large move in the Dow Jones Industrial Average is likely to be down.

What is your favorite fund?

Wright:We like the ProFunds Rising U.S. Dollar Fund(RDPIX) very much. We took a significant position in this asset class in early December, when there were only 3% dollar bulls. If we are correct that the coming months will be scary in the stock market, that will be one factor pushing global investors into the dollar. If we are correct that the cyclical global shift into risk-taking and complacency peaked in December, then that will also push global money into the U.S. dollar.

What is your top sleeper fund?

Wright:We think "floating income" funds like PIMCO Floating Income Fund(PFIIX) will allow conservative investors to sleep well, and will be surprisingly productive for a few more months. Long-term, the First Eagle Global Fund(FESGX) is a great fund most people don't know about.