Funds for Tough Times: Fairholme

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


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.

Fairholme (FAIRX). Bruce Berkowitz's $6.7 billion fund may be down 33 percent so far this year, but that's still better than 92 percent of all large-company funds that invest in a blend of growth and value stocks. Berkowitz pays careful attention to a company's cash flow: He favors those with a large cash pile, which provides flexibility to fund acquisitions, increase dividends, or buy back stock. Pfizer, the triple-A rated, cash-rich pharmaceutical giant, recently occupied the fund's top spot.

2000-02 bear market return: 12 percent

2008 year-to-date return: -33 percent

More funds for tough times:

Mairs & Power Growth

Yacktman and Yacktman Focused

FAM Equity-Income

FAM Value

American Century Equity Income

Royce Special Equity

Berwyn Fund

Forester Value