For lots of folks, capital preservation is the name of the game when it comes to navigating a downturn. And make no mistake: With the S&P continuing its slide -- and with the growth-oriented likes of Adobe (NASDAQ:ADBE), Yahoo! (NASDAQ:YHOO), Electronic Arts (NASDAQ:ERTS), and Dell (NASDAQ:DELL) below their 52-week highs by 30% or more -- sitting on the sidelines has sure seemed like a pretty smart strategy lately.

Trouble is, lurching into cash and stuffing money that would otherwise go to your brokerage account under a mattress could very well mean missing a golden opportunity to snap up long-haul overachievers at a steep discount. While they've had their troubles lately, each of the aforementioned go-getters has positively blasted past the market's average for the 10 years that ended with May.

Same goes for Apple Computer (NASDAQ:AAPL), Symantec (NASDAQ:SYMC), and SanDisk (NASDAQ:SNDK), all of which have hit the skids hard during the market's recent sell-off.

Against the grain
With that in mind, now is an excellent time to adopt a contrarian mindset. It's when investors are stampeding for the exits, after all, that savvy types can lay the groundwork for future growth. Indeed, I've thought for some time now that, given the relative shellacking it's taken ever since the market melted down in March 2000, large-cap growth is the most attractively valued area of the market.

That said -- and as Mr. Market is amply demonstrating -- investing in growth stocks (even large-cap stalwarts) can be risky business. With that in mind, one smart way for investors to proceed is to plunk down the bulk of their moola on a well-diversified portfolio of world-class mutual funds and then tilt toward (rather than fall headlong into) growth stocks. In that direction, I think, lie market-beating returns and a good night's sleep.

Quite the twofer, no?

Model behavior
To be sure, funds are hardly immune to volatility. Compared with a portfolio of just individual equities, though, they can provide smooth sailing -- provided that you choose wisely (in the Foolish way) and assemble them into a portfolio that suits your temperament and timeline as an investor.

As it happens, we've done precisely that at Champion Funds, the Fool newsletter service that I head up. And so far, so good: Taken together, our list of recommended funds has beaten the market's average by nearly 9 percentage points, and all of our model portfolios -- which come in aggressive, moderate, and conservative flavors -- have beaten their benchmarks, too.

The Foolish bottom line
Even if you think of yourself as a stocks-only kind of investor -- an orientation the market's recent volatility may cause you to reconsider -- I'd encourage you to snag a free 30-day guest pass to Champion Funds. Stocks and funds can co-exist peacefully (and profitably) in the same portfolio, after all, and my hunch is that you'll find investing in individual equities even more rewarding after you've laid a solid foundation of mutual funds that can help insulate your portfolio from performance gyrations.

So click here to get started, and let us know what you think about our service on our newsletter's discussion boards. Yep, that's right: Those come gratis, too.

Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service, and at the time of publication didn't own any of the securities mentioned above. Symantec and Dell areInside Valuepicks. Dell and Electronic Arts areStock Advisorpicks. You can check out the Fool's strict disclosure policy by clicking right here.