The market's volatility gave us all some thrills and spills over the summer, but let's face facts: Though there have been occasional pullbacks, we've essentially been on an upward trajectory ever since the fourth quarter of 2002. But in light of the recent gyrations, is there further room to fall?

Could be, yes
By historical standards, we've enjoyed a lengthy bull run, and spendthrift stock shoppers will find no shortage of pricey equities. Jabil Circuit (NYSE:JBL) and Hologic (NASDAQ:HOLX), for example, sport a price-to-earnings ratio (P/E) of more than 50, while Juniper Networks (NASDAQ:JNPR) and Chipotle Mexican Grill (NYSE:CMG) (NYSE:CMG-B) clock in at greater than 70. Meanwhile, Genentech (NYSE:DNA) and SanDisk (NASDAQ:SNDK) trade with multiples higher than their industry averages.

If the market hits the skids again, puffed-up multiples could deflate in a hurry.

How to proceed?
Fortunately, you have a compelling option for insulating your portfolio: top-shelf mutual funds. If you want to maintain exposure to the market, while taking on less risk than you'd have with a stocks-only lineup, funds are an intelligent choice -- provided you choose them intelligently.

Intelligent funds have managers who've been in place for at least five years, and preferably longer. Tenure is a key metric for shrewd fund shoppers, who know that mutual funds can only be as strong as the stock-pickers calling their shots now. That's why past performance, on its own, is woefully overrated. If a fund's eye-popping historical returns don't belong to its current leader, they're next to useless in gauging the fund's forward-looking prospects.

It's far better to focus on factors such as fees, strategies, and whether managers put their money where their mouths are by investing their own moola alongside that of their shareholders.

The Foolish bottom line
We consider all the above and more at the Fool's Champion Funds investing service, and so far, so good. Since opening for business more than three years ago, all but one of our recommendations have made money for shareholders since we picked 'em.

If you're looking to reduce risk, and you'd like to save time by zeroing in on the cream of the fund industry's crop, consider taking Champion Funds for a free spin by clicking here. In addition to our complete list of recommendations, you'll also have access to our model portfolios, members-only boards, and every column inch of advice we're served up since day one.

This article was originally published on April 17, 2007. It has been updated.

Shannon Zimmerman runs point on the Fool's Champion Funds newsletter service. At the time of publication, he didn't own any of the securities mentioned above. Chipotle is a Motley Fool Hidden Gems and Rule Breakers recommendation. You can check out the Fool's strict disclosure policy by clicking right here.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.