Funds for Tough Times: FAM Equity-Income

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

By + More

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.

FAM Equity-Income (FAMEX). Managers Tom Putnam and Paul Hogan look for small and midsize dividend-paying companies with strong cash flow, little or no debt, and solid management teams, and they buy when shares are trading at a discount to what they think they'd be worth if they were sold or broken up. The strategy has produced respectable, although not staggering, long-term returns. Over the past decade, its average annual 3 percent gain has beaten the S&P by 4 percentage points.

2000-02 bear market return: 11 percent

2008 year-to-date return: -33 percent

More funds for tough times:

Mairs & Power Growth

Yacktman and Yacktman Focused


FAM Value

American Century Equity Income

Royce Special Equity

Berwyn Fund

Forester Value