Balanced Funds Can Smooth Stock Swings
"Equities still have more upside potential than bonds for long-term investors, but the problems in Europe have raised the risks," says manager Kurt Spieler.
For his stock holdings, Spieler looks for growth stocks selling at reasonable prices. When concerns about the oil spill in the Gulf of Mexico punished energy stocks, he began buying oil and gas producers, including Apache (APA) and Occidental Petroleum (OXY). After sinking for much of the past year, gas prices are starting to rise, says Spieler. That should boost earnings for gas producers.
Cautious investors may prefer the Hussman Strategic Total Return Fund (HSTRX), which has returned 8% annually during the past five years, outdoing 99% of its competitors in the conservative allocation category. Manager John Hussman can put up to 30% of assets in equities, but lately he's been keeping his fund at 5%. Hussman worries that excessive debt could smoother the economic recovery. He expects a new wave of mortgage defaults to soon hit.
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