"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. To protect shareholders, the fund recently had 70% of assets in Treasury securities. The biggest stock positions are in gold mining companies, including Newmont Mining ( NEM) and Barrick Gold ( ABX). Because of his caution, Hussman lagged most competitors during the huge rally of 2009. But he remained firm in his belief that stocks were overvalued. This year the conservative stance has proved on target, enabling the fund to protect shareholders from erratic markets. -- Written by Stan Luxenberg in New York.