Cheap, Safe Stocks to Make Money in 2011

BOSTON ( TheStreet) -- The S&P 500 Index's decline of 4.1% in the past month has erased much of the year's early gains, resulting in a slim 2% upside through Friday, as analysts project slower corporate earnings growth and a slew of international uncertainties from Europe to Asia puts investors in defensive mode.

But that would be overlooking industries that have benefited from a shift out of riskier investments. The best U.S. investment managers are outperforming stock-market indices mainly by owning a mix of consumer, health-care and utilities stocks, along with select shares in technology and energy that are bucking trends.

The Vanguard Wellesley Income Fund ( VWINX), the Sequoia Fund ( SEQUX) and the Yacktman Fund ( YACKX) are three large and well-known mutual funds that are on track to produce gains for this year.

Those three funds, and some others, are ahead of changes in analysts' sector recommendations. Standard & Poor's shuffled its model weightings to a more conservative stance May 17, citing "increasingly sluggish U.S. economic data," as well as slowing global economic growth and European sovereign risk, to name a few of its concerns.

Worthy of particular note, the ratings firm moved consumer-staples stocks to a suggested "overweight" allocation from "market weight" because the sector reached "all-time-high territory (in April), and we see this as a sign of technical strength."

S&P said energy and industrial shares also are "overweight," while utilities were upgraded to "market weight" from "underweight." The research firm downgraded materials to "market weight" and moved financials to "underweight," where they join consumer-discretionary stocks.

Nevertheless, S&P equity strategist Alec Young told TheStreet that his firm continues to see the S&P 500 Index rising to 1,400 over the coming year. The benchmark index closed at 1,271 on Friday after peaking at 1,362 at the end of April.

Reviewing what successful mutual fund managers are doing may provide investors clues for stocks picks. A so-called defensive portfolio has traditionally included consumer staples, health-care and utilities stocks.

Here are 10 funds that are defensive in their makeup and also have good five-year records, which means they have weathered other market slides without incurring serious damage:

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