Course Correction

be a core holding,” he says, “offering reasonable income with moderate risk. Funds such as PIMCO Total Return Fund and Fidelity Intermediate Bond Fund may be good choices.”

PIMCO Commodity RealReturn Strategy Fund also rates a favorable mention from Coumarianos. “It tracks the Dow Jones AIG Commodity Index so you get broad exposure to commodities, including oil and gas,” he says.

Coumarianos also says there’s value in large-cap domestic stocks, particularly those companies who have protected their competitive positions. His picks in the large-cap growth area include T. Rowe Price New America Growth, Vanguard Growth Equity Fund, and USAA Aggressive Growth. In the large-cap value category, picks include ICAP Select Equity Fund, Sound Shore Fund, and Weitz Value Fund.

A well-diversified mutual fund portfolio for these uncertain times should include old reliables such as large U.S. companies and high-quality bonds as well as new favorites that range from foreign stocks to small companies. A small (perhaps 5%) allocation to commodities and a similar allocation to a real estate fund might provide valuable protection in case inflation heats up and the market turns down.

Although inflation fears and geopolitical concerns have shaken stock markets lately, Tolley has little inclination to cut back on stocks in anticipation of a possible correction, especially for investors who are in it for the long haul. “When stock prices fall,” she says, “there are buying opportunities. At any kind of store, when is the best time to go shopping? During the semi-annual sales.”

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