Which Way Is Up?

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

improves and interest rates start to turn up this year, bond funds will be hurt, so investors are likely to move money into growth stocks.”

How should you react to your portfolio being clawed by the bear market of 2000-2001?

Of course, monitor your holdings. Before making radical asset shifts, keep in mind the resilience of the stock market. For instance, the S&P 500 was up an impressive 16.8% in the four months after its September 21 low (the index plummeted, due in large part to terrorist attacks on the World Trade Center and the Pentagon). Historically, the S&P 500 has had an average gain of 18.6% during rebounds after nine preceding post-war bear markets.

FINDING BALANCE WITH BONDS
Long-term investors should heed this bit of advice: Stay diversified across-the-board. In addition to growth and value stock funds, purchase bond funds as well.

In some cases, Hammond has repositioned his clients’ assets, putting more of their money into bond funds last year. But he may not be as aggressive going forward. “Since interest rates are more likely to go up from here than to go down further,” he asserts, “I’m reluctant to advise a greater allocation to bond funds.”

The Browns, however, like safe instruments and increased their fixed-income allocation last year, moving dollars into bond offerings such as Alliance California Municipal Income Fund (NYSE: AKP), a closed end fund which provides income free of state or federal tax. The couple will continue to embrace diversification and quality. In order to maximize their holdings and retire comfortably, with a $1 million portfolio, the Browns will stay away from “stunt” investing. And you should too.

B.E.’s TOP MUTUAL FUND PERFORMERS

      AVG. ANNUALIZED TOTAL RETURN      

FUND NAME

TICKER

1-YEAR
TOTAL RETURN*

3-YEAR

5-YEAR

MIN. INIT.
INVEST.

ASSETS*
(in millions)

PHONE

Large Growth
Rydex Arktos Inv. RYAIX 15.13% -13.39 NA $25,000 $91,597,511 800-820-0888
Potomac OTC/Short POTSX 6.77 -18.07 NA 10,000 5,588,566 800-851-0511
Rydex Retailing Inv. RYRIX 3.23 -3.99 NA 25,000 24,899,117 800-820-0888
Bear Stearns Focus List A BSFAX 2.93 3.87 NA 1,000 19,353,659 800-766-4111
Fidelity Export & Multinational FEXPX 0.72 13.17 17.02 2,500 672,889,376 800-544-8888
Mid-cap Growth
Heritage Mid-Cap Stock A HMCAX 19.15 21.74 NA 1,000 83,936,454 800-421-4184
Needham Growth NEEGX 12.07 29.33 24.56 5,000 345,008,813 800-625-7071
Fidelity Select Bus Serv & Outsrcg FBSOX 9.59 11.84 NA 2,500 57,734,959 800-544-8888
Liberty Acorn Twenty Z ACTWX 8.00 15.97 NA 1,000 69,369,717 800-322-2847
Strong Discovery STDIX 2.75 3.99 5.94 2,500 158,266,367 800-368-1030
Small Growth
Buffalo Small-Cap BUFSX 31.18 33.21 NA 2,500 536,477,702 800-492-8332
William Blair Small-Cap Growth N WBSNX 25.99 NA NA 5000 12,278,700 800-742-7272
Dreyfus Premier Micro-Cap Growth A DPMGX 25.44 NA =”MIDDLE”>NA 1,000 16,348,000 800-782-6620
Oberweis Micro-Cap OBMCX 23.86 10.8 9.47 1,000 28,317,533 800-323-6166
Exeter Small-Cap A MNSMX 22.05 13.64 7.31 2,000 103,472,085 800-466-3863
Large Blend
ProFunds UltraBear Inv. URPIX 22.65 1.34 NA 15,000 51,711,817 888-776-3637
Thompson Plumb Growth THPGX 19.13 16.81 20.09 1,000 327,817,909 800-999-0887
Rydex Ursa Inv. RYURX 16.33 6.17 -5.19 25,000
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