Funds for Tough Times: American Century Equity Income

A relatively conservative stock fund that's been holding up better than its peers.

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So far this year, not a single diversified stock fund has made money. Most have gotten creamed: According to Morningstar, the average loss for funds that invest in the United States is 42 percent, and, for those that invest internationally, 50 percent. Here's a look at relatively conservative stock funds that produced positive returns during the last bear market (March 24, 2000, through Oct. 9, 2002) and have been holding up better than their peers so far this year.

American Century Equity Income (TWEIX). Companies with a history of doling out dividends are the focus at this team-managed fund. Most of the fund's assets reside in large-company stocks, which the managers scoop up on the cheap (according to valuation measures such as price-earnings ratios). The portfolio, which counts ExxonMobil, General Electric, and AT&T among its top-five stocks, also holds stakes in midsize companies and convertible bonds. The fund's long-term results are solid: Its annualized 6 percent return over the past 10 years ranks in the top 1 percent of all funds that invest in large, bargain-priced stocks.

2000-02 bear market return: 6 percent

2008 year-to-date return: -24 percent

More funds for tough times:

Mairs & Power Growth

Yacktman and Yacktman Focused

Fairholme

FAM Equity-Income

FAM Value

Royce Special Equity

Berwyn Fund

Forester Value