Which Way Is Up?

B.E. provides the answer by offering a slate of funds that will boost the performance of your portfolio

her holdings every day. “If you keep up with the news, you tend to get worried, especially the way things have been the past two years. Now, I take a longer-term view, counting on a balanced portfolio.”

According to their advisor, Los Angeles financial planner Marv Kaye, J.D., CFP, the Browns’ target asset allocation is 70% in stocks and 30% in bonds. “Growth stocks had gone up so much [in the late ’90s] that the ratio [of stocks to bonds] went to 80/20,” he says. “That seemed to be too risky, especially considering the prices at which some stocks were selling. So we moved out of some growth and technology funds, even ones that we liked.”

On the equity side, aggressive stock funds were replaced by additional investments in [one of] the PIMCO Renaissance Funds which invest in mid-cap value stocks, and Alliance Growth & Income (CABDX), which provides exposure to the large-cap value category. “In stocks, I’m still two-thirds in value,” says Kaye, “because those stocks seem reasonably priced compared to growth stocks.”

Value investor Joseph Delaney, a schoolteacher in Como, Mississippi, has made American Funds offering, Investment Company of America (AIVSX), one of his mainstay investments. “I began to invest seriously just a few years ago when I decided to build up a retirement fund,” he says. “I’ve been putting money into Investment Company of America every month, no matter how good or bad the market has been doing. I have developed the habit of consistent investing, and for the first time I feel like I’m getting somewhere.”

Delaney’s advisor, Memphis, Tennessee, financial planner Lee A. Jackson, n
otes that Investment Company of America, classified as a large-cap value fund by Morningstar, has a stellar long-term record. “It has been around since 1934 with only a few negative years, so I thought that this would be a good fund for someone like Joseph, who’s just getting his feet wet as an investor,” Jackson says. The fund’s 4.6% loss last year was its first drop in more than a decade (it has turned in an impressive 13% annual return over the past 10 years).

According to Jackson, Delaney serves as a model for first-time investors. “He’s someone who hadn’t done anything for retirement but has started saving systematically,” Jackson says. “Joseph has the discipline, and he’s on his way to accumulating something that will be significant.”

Even though value funds have been up while growth funds have been beaten down, investors shouldn’t abandon that area altogether. After two dismal years, Kaye says the time may be ripe to buy such growth fund leaders as RS Emerging Growth (RSEGX). The mid-capper turned in a 182% return in 1999, and still — after two weak years — boasts one of the best five-year records of all mutual funds.

Value-prone Hammond also believes the time may be near to go for growth. “Investments that have lagged for a couple of years may be attractive,” he says, “so mid- and small-cap growth funds might rebound. If the economy

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