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The recent one-two punch of the credit crunch and last month's negative jobs report has noticeably raised the decibel level of the bear market talk.

But with spirited rallies interrupting attempts by the ursiforms to establish dominance of the stock market, it's hard for an investor to know what to do. A strategy with exposure to equities but with potential immunity to downturns would seem to make sense.

There are a number of funds with a stated strategy of smoothing out the market's bumps, but as you can read

here, many have failed to deliver. A much more logical starting place might be equity funds that actually have managed to swim upstream, both during the bloodbath of 2000 through 2002 and again during the past few months.

There are a grand total of eight. That's excluding "inverse" funds, which are designed to move in the opposite direction of the stock market. These would be a sure-fire disaster should the bulls prevail.

They provide an interesting mix: four of them focus on domestic investments while an equal number are free to invest around the world. Also, four of the funds use the traditional approach of mixing equity and fixed-income investments to keep their returns on a steady course.

Two are asset allocation funds, which are intended to provide one-stop shopping for investors, providing exposure to stocks, bonds, real estate and other asset classes; another two are balanced funds, which mix just stocks, bonds and cash.

The overall diversity in this group of bear-beaters seems proof that there is more than one way to hedge against a market downturn

Two members of the group, the


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Alpha Only Fund (GGHEX) and the



Advantage Market Neutral Fund (JAMNX) have names that indicate they draw inspiration from those popular investments for all market seasons -- hedge funds.

The James Advantage Market Neutral fund invests in common stocks that the adviser believes are undervalued and more likely to appreciate, and sells short common stocks that the adviser believes are overvalued and more likely to depreciate. According to the company's Web site, its top five long positions as of June 30 were

The Buckle

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WR Berkley



J.C. Penney

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Its top five short positions were


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Midwest Banc



Trustco Bancorp

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Cumulus Media

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The GMO Alpha Only Fund, on the other hand, is actually a fund of funds. It invests in a number of other funds managed by GMO -- in other words, it offers a little bit of everything. While the word "alpha" implies that it employs a hedge-fund-like strategy, in fact its listed investment objective is "asset allocation." The fund's ability to gain ground during periods of market weakness seems a validation for its mélange of investment attributes.

At the other end of the spectrum, there are also two funds that are relatively pure investment plays. The


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Global Natural Resources Fund(IGNAX) is the only single-sector fund in the set. Its top holdings, as of June 30, include

Diamond Offshore Drilling

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Valero Energy

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General Electric

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, according to the investment adviser's Web site.

Meanwhile the


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Asian Growth & Income Fund (MACSX) is the only member concentrating on one specific geographic region. Its top holdings, as of July 31, include Singapore Press Holdings,



and SK Telekom, Hang Seng Bank, according to the investment adviser's Web site.

Richard Widows is a financial analyst for Ratings. Prior to joining, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.