"When our most recent measurement period has been down, it is useful to look for funds that fell less than the market while also evidencing attractive reward/risk characteristics over the past three years," says Thurman Smith.

The editor of Equity Fund Outlook -- a fund advisory service that places its greatest emphasis on manager expertise -- takes a looks at a trio of mutual funds -- Permanent Portfolio (PRPFX), CGM Focus (CGMFX) and Leeb Focus R (LCMFX).

"Permanent Portfolio is not strictly an equity fund, but does have a structured diversification that is broader than most sector funds.

"Preservation of buying power over all market conditions is the idea behind this unique offering, which maintains a fixed allocation of 25% in gold and silver, 10% in Swiss franc assets, 15% in U.S. and foreign real estate and natural resource companies, 15% in aggressive domestic stocks, and 35% in U.S. government paper.

"Permanent Portfolio has not beaten the market over very long periods, but it returned 8.5% annualized over the last fifteen calendar years vs.10.5% for the market, and over the past ten years its annualized return of 9.4% beat the market's 6.3%. It did this with a Risk Exposure half that of the market. (One reason for therecent good performance is its gold allocation.)