NEW YORK (TheStreet) -- Struggling to protect their assets, investors have been turning to world allocation funds. The funds have the flexibility to dodge trouble spots and invest in promising stocks and bonds around the world. During the past year, investors have poured $24 billion into world allocation funds, according to Morningstar. That was a striking showing at a time when many stock funds suffered big outflows. Steady performance has been attracting the inflows. During the past five years, world allocation funds returned 3% annually, while the S&P 500 dipped into the red.

Some of the most popular world allocation funds make sudden tactical moves, emphasizing emerging markets one year and U.S. bonds the next. But many funds in the category shift only slowly. The aim is to deliver steady results and not necessarily call every market move. Among the strongest performers in the steady group are

Calamos Global Growth & Income

(CVLOX) - Get Report


Forester Discovery

(INTLX) - Get Report


Loomis Sayles Global Equity and Income

(LGMAX) - Get Report

. These funds have all used unusual strategies to cope with difficult markets.

Among the most cautious choices lately has been Forester Discovery. Portfolio manager Tom Forester has the flexibility to put all his assets in stocks, but these days he has 48% of the fund in cash. Forester is trying to limit risk at a time when banks face enormous problems in the U.S. and Europe. He worries that problems in the developed world will harm the booming markets of the emerging economies. "We would hate to get all the way into the markets, and then have our shareholders lose 40%," he says.

In recent years, the cautious approach has helped the fund weather downturns. During the collapse of 2008, Forester returned 7.7%, outdoing his average competitor by 34 percentage points. For the past five years, the fund has returned 5.6% annually, topping 80% of peers.

For protection, Forester is currently focusing on rock-solid blue chips that sell at modest prices. A holding is

Royal Dutch Shell


, the oil multinational. Forester says that the company is a steady grower. The stock pays a dividend of 5.2% and sells for a 6.7 times next year's earnings.

Forester also likes


(AZN) - Get Report

, the British drug giant. The stock trades for 7.5 times next year's earnings and has a dividend yield of 5.9%.

Calamos Global Growth & Income holds an unusual mix that includes a big slice of convertible securities and foreign government bonds. The fund currently has 40% of assets in convertibles and 11% in sovereign bonds, with most of the rest in equities. Portfolio manager Nick Calamos says that the bonds and convertibles can cushion the fund during periods when stocks are falling. Calamos aims to deliver equity-like returns, while limiting losses in downturns. During the past five years, the fund has returned 4.0% annually, outdoing 62% of peers.

Recently Calamos has begun raising his equity allocation. He says that investors have become overly pessimistic about the economy. "The market is pricing in a mild recession in the current valuation of equities," he says.

Calamos concedes that many risks remain in the markets. That is why he continues to hold bonds and convertibles. Calamos typically favors growth stocks. These days he is focusing on companies that can grow, even if the economy slips into recession. A holding is


(QCOM) - Get Report

, which licenses patents and makes chips that are crucial for wireless phones. With demand for wireless service jumping around the globe, earnings climbed 34% in the past quarter.

He also owns

Chesapeake Energy

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, a natural gas producer. Calamos says that the returns on capital will increase as the company exploits its growing reserves.

Loomis Sayles Global Equity and Income keeps from 30% to 70% of its assets in equities. The fund is currently near the top limit, with 66% of assets in stocks. The portfolio managers figure that bond yields are puny. They worry that rates could rise in the next several years, which would punish bond prices. "Over the next three years, equities should be the place to be," says portfolio manager Warren Koontz.

A big stock position has helped the fund excel in recent rallies. In 2010, the fund returned 21.5% and ranked as the top performer in the world allocation category. During the past five years, Loomis Sayles returned 7.4% annually, outdoing 94% of peers.

Many of the fund's holdings are big growth stars, including


(AAPL) - Get Report



(GOOG) - Get Report

. But the fund also includes solid companies that fit in the blend box. A holding is

Arcos Dorados

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, a


(MCD) - Get Report

franchisee that owns restaurants throughout Latin America and the Caribbean. The franchisee has been expanding throughout its region, and Koontz says that the company can open more units. "There is room for McDonald's to grow in Latin America," he says.

Another holding is


(MSFT) - Get Report

. Koontz says that investors have low expectations for the software giant because much of its revenues are tied to sales of personal computers. "Everybody feels that the PC is dead, and Apple's iPad will take away market share," says Koontz. "But the PC sales numbers have been better than people expected."

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Stan Luxenberg is a freelance writer specializing in mutual funds and investing. He was executive editor of Individual Investor magazine.