13 Funds With Balanced Portfolios

Permanent Portfolio (PRPFX) is a fund we come upon often. Its 10-year average annual return of 8.3% puts it in the top 3% of its Lipper category. The fund charges a low 0.95% annual expense ratio, about one-third cheaper than our usual cutoff. And its manager, Michael Cuggino, has been running the show since 1991. These days, it's uncommon to find a manager who has stayed at the helm for so long.

For all its merits it's a bit difficult for many investors to determine where Permanent Portfolio would fit in the average retirement account. That's because of its eclectic collection of positions, including aggressive growth stocks, gold, silver, Treasury bonds, Swiss paper and individual names like Boston Properties (BXP) (at least that was the makeup as of the last filing). Maybe you should find some room for it. In 2008, the fund has lost just 10.5% vs. a 37% deficit for the S&P 500.

Permanent Portfolio made this week's screen for balanced funds, or what Lipper calls "mixed asset" offerings. Balanced funds typically own sleeves of equities, bonds and cash in their portfolios. There are 2,409 funds and share classes in this category. We disqualified 2,166 that charge loads. We then added in our usual fee and three- and five-year performance criteria. We also knocked out target-date, equity-income and asset-allocation funds, since we write about those funds on separate occasions during the year. We ultimately wound up with 13 funds and they're listed on the table below.

The last few weeks we've been trying to highlight fund categories that have been weathering the storm a bit better than their peers. That's not exactly an easy chore. The Dow Jones Industrial Average has dropped over 2,000 points during the last week, a staggering downturn. Indeed, it dropped almost 700 points in the moments after the opening bell rung on Friday. The average domestic equity fund has lost 35.8% this year, according to Lipper. It's tough to tell just how well balanced funds are doing compared to that tally. Lipper says the average mixed equity fund dropped 27.7% the last 10 months. But there are subgroups within that category that have fared worse. That said, the funds on our list have decreased just 18.5% this year.

It's difficult to make a smart recommendation while the stock market jumps around so much. There is no Hail Mary move you can pull right now that will get your portfolio back on track. If you consider yourself a conservative investor -- or are just tired of seeing your account continue to spiral downward -- a balanced fund may be a good fit. It won't take off during bull markets. However, it (hopefully) won't lose as much as the S&P during bear markets.

Of course, balanced funds aren't immune to the whims of the stock market. At its last filing Dodge & Cox Balanced (DODBX) owned Wachovia (WB), AIG (AIG) and General Electric (GE), three companies that have been whacked during the credit crisis. The fund is down 34.7% this year and ranks in the bottom of its Morningstar category.

If the idea of stepping off the roller coaster is intriguing we would suggest taking a look at Hussman Strategic Total Return (HSTRX), Permanent Portfolio, Janus Balanced (JABAX), Mairs & Power Balanced (MAPOX) or James Balanced Golden Rainbow (GLRBX). All of those funds have made our screens in the past and continue to be well-run offerings.

The Criteria: The no-load funds on our list fall into Lipper's mixed asset category. They are open to new money, require a minimum investment under $5,000 and charge less than a 1.5% annual expense ratio. Their performance track records put them in the top 20% or this category over the trailing three- and five-year time periods. We didn't include target-date, equity-income or asset-allocation funds because we write about them separately throughout the year.