NEW YORK (TheStreet) -- At first glance, the performance record of AMF Large Cap Equity (IICAX) might appear uninspiring. During the past 15 years, the actively managed mutual fund returned 4.6% annually, compared to 4.5% for the S&P 500. Why bother with the active portfolio when you might do about as well with an index fund?But the fund is worth a second look because of an important trait: During downturns, AMF outperforms the benchmark like clockwork. AMF topped the S&P by 6 percentage points in 2002, a year when Internet stocks sank and the benchmark lost 22.2%. In the turmoil of 2008, the S&P lost 37% and AMF outperformed by 8 percentage points. AMF is not the only large blend fund to top the S&P by limiting losses in downturns. Other low-risk funds that excelled in the past 15 years include American Funds Investment Company of America ( AIVSX), Dreyfus Appreciation ( DGAGX), and Legg Mason ClearBridge Appreciation ( SHAPX). All those winners achieved steady records by focusing on rock-solid blue chips. Because of their reliable performance, the funds can be sound core holdings. For conservative investors, AMF is especially appealing. The fund ranks as one of the steadiest large blend choices, as indicated by standard deviation, a measure of how much an investment bounces up and down.
Holdings include such familiar names as Coca-Cola ( KO), International Business Machines ( IBM), and Exxon Mobil ( XOM). "We want to have a portfolio that is easy for our shareholders to understand and hold during difficult times," says Trautman. Once he buys a stock, Trautman rarely sells. He turns over 7% of his portfolio annually, compared to a figure of 71% for the average large blend fund. Of AMF's current holdings, a dozen have been in the fund for more than 10 years. While Trautman sometimes sells when a company's fundamental outlook deteriorates, he does not panic in response to troubling headlines about short-term problems. JNJ). The stock has suffered recently because of product recalls. But Trautman argues that management is addressing the issues. "The company's business model is not damaged," he says. Johnson & Johnson's earnings are growing, and the company pays a dividend yield of 3.6%. The stock sells for a modest forward price-earnings ratio of 14. The only new stock that AMF has bought in the past year is E.I. du Pont ( DD). The stock yields 3.5%. Trautman says that earnings should increase as the company moves into businesses with higher margins. Although prices of blue chips have climbed in recent years, Trautman argues that his stocks remain compelling values. At a time when 10-year Treasuries yield 1.66%, stocks in the AMF portfolio boast a dividend yield of 2.5%. Trautman says the dividends are especially attractive because they have been growing at an 8.6% annual rate. If that pace continues for 10 years, the portfolio will yield 5.4% based on the original capital. Follow @StanLuxenberg This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.