NEW YORK (TheStreet) -- Top mutual fund managers are finding a way to make money as the economy slows."It's going to take a while for the economy to get back on its feet without relying on stimulus," says Matt Eagan, who helps manage the $19.1 billion Loomis Sayles Bond Fund ( LSBDX). "We are going to grow, but it's going to be at a modest pace, below expectations." The Loomis Sayles Bond Fund has returned 22% over the past year, better than 85% of its peers.As for stocks, the S&P 500 yesterday extended last month's 6.9% gain after an April-to-June decline brought on by concerns of slowing economic growth. Even as most companies are beating analysts' earnings estimates, economists say the unemployment rate probably rose last month, producing choppy stock-market returns.
Travis Takes StocksUnlike fixed-income manager Eagan, Intrepid Capital Fund ( ICMBX) manager Mark Travis deals solely in stocks. He has a superior record of picking the right ones, generating average returns of 7% over the past five years, exceeding 99% of his mid-cap peers. Similar to Eagan, however, Travis expects growth to be slow in the second half of the year as consumers and governments dig their way out of debt. "It's just tough out there. We have a lot of leverage in the system, probably 3.5 times our GDP of $14 trillion," says Travis. "We are going to have to work it off the hard way, either by repudiating it or paying it down."
Europe's DiamondsMadelynn Matlock, manager of the Huntington International Trust ( HIETX), says there are gems in Europe even amid several countries' debt woes. The $286 million fund has returned more than 10% in the past year. Over the past five years, Huntington International Trust has risen an average of 4.2% annually, beating 80% of its large-cap, foreign-stock rivals. "Europe is going to be volatile in the near term while they're working out their problems with the European Union, so we are currently underweight the region, yet eventually it's going to be a very interesting place to invest more money," says Matlock. Despite the euro zone's debt problems, Matlock is a big believer in the shares of giant German industrial company Siemens ( SI). Southern Europe may be down and out, yet Germany, led by Siemens, continues to be an export powerhouse especially with the weak euro as a tailwind, says Matlock. Another European company Matlock is particularly high on is Swiss drugmaker Novartis ( NVS), which she calls cheap and, perhaps more importantly considering the circumstances, "stable." "A lot of investors have not liked the pharmaceuticals in recent years because of the concern about patents coming off, but Novartis has a lot of other operations that will serve them well," says Matlock. "They've bought Alcon, they have Sandoz, a big generic-drug operation, and they also have consumer products which will smooth out its results." -- Written by Gregg Greenberg in New York.
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