The stock market's roller-coaster ride of recent weeks is enough to give enough the most iron-willed of investors second thoughts. Add to that picture a spate of weak economic data and the phrase "double-dip recession" has suddenly resurfaced in media outlets across the nation. And while I think it's premature to declare a recession right now, investors are reassessing their risk tolerance and many are preparing for the worst. If you're worried about the effects another downturn could have on your portfolio, here are two funds that should protect you quite well if markets turn south again, and will also deliver solid returns if the market strengthens.

Yacktman (YACKX)
This fund has a long history of playing it safe and sticking to its guns, a process which has paid off handsomely for fundholders. Management employs a bottom-up stock selection process here, looking for deeply undervalued companies with attractive returns on equity and healthy debt structures. In the past, the fund has tended to shine during bear markets while trailing during market upswings. For example, the fund outpaced the S&P 500 by 31 percentage points in 2001, 33 percentage points in 2002, and 11 percentage points in 2008. But some solid stock picking also vaulted the fund to a 59% gain in 2009's recovery market, besting the S&P 500 by nearly 33 percentage points. Thanks to strong performance in all of these years, among others, the fund now ranks in the top 1% of its peer group over the most recent 10- and 15-year time periods.

The fund isn't afraid to sit on cash, which results as a byproduct of its investment process. Cash holdings, now at 12% of assets, have ranged as high as 20%-30% in recent years. That can hold the fund back in momentum-led environments, but also provides protection in overheated or more richly valued markets. Right now, the team is emphasizing defensive consumer names with predictable cash flows. They believe many large brand-name consumer products with juicy dividend yields, such as top holdings PepsiCo (NYSE: PEP), Procter & Gamble (NYSE: PG), and Johnson & Johnson (NYSE: JNJ), are all cheap right now and should pay off nicely down the road. To be sure, the fund won't always look as good as it does now, but if further volatility is in store for the stock market, Yacktman is an excellent choice to smooth out that ride.

Sequoia (SEQUX)
If you want to invest like Warren Buffett, then Sequoia may be just the fund for you. The management duo in charge here looks for companies with healthy balance sheets, stable competitive advantages, and excellent management -- the very same criteria used by the Oracle of Omaha himself. Perhaps not surprisingly, Buffett's own Berkshire Hathaway (NYSE: BRK-A) is one of the fund's biggest holdings, at 9.3% of equity assets. Other holdings include industrial supply retailer Fastenal (Nasdaq: FAST), whose distribution network fund managers see as a competitive advantage and whose healthy returns on capital make the stock attractive. Likewise, tech titan Google (Nasdaq: GOOG), which the fund bought in late 2010, is a favorite because of its industry-leading position in the market, as well as its high growth rates and massive amounts of cash.

Over the past 15-year period, Sequoia ranks in the top 3% of all large-cap blend funds with an annualized 9.5% return. Like Yacktman, the fund isn't afraid to hold cash if market conditions dictate. In fact, as of the most recent Morningstar data, 25% of fund assets were in cash. This positioning, along with the fund's well-honed stock selection process, has led to a portfolio that outperforms in times of market distress, as it did in 2001, 2002, and 2008, when it beat the S&P 500 Index by 10 percentage points or more each year. On the flip side, the fund has been rather sluggish in up markets, so don't expect this one to dazzle when the market takes off. But the long-run picture here is a solid one. Prior to its reopening in 2008, the fund was closed for 25 years, so don't wait if you want to own this fund.

Final thoughts
I want to stress that in times of heavy market volatility, investors should remain committed to their long-term asset allocation. It's been proven time and time again that most investors are terrible market timers and any attempts to move into and out of the market to avoid sell-offs are usually ill-timed and end up hurting more than helping. But if your equity allocations are genuinely keeping you up at night and causing you needless worry, that's a sign you may be too aggressively positioned.

If that's the case, there's nothing wrong with cutting back on stocks. A lot of people think they can stomach the ups and downs that come with equity investing, but it's one thing to think you can live with huge drops in your portfolio and another to actually live through them. So if there's a disconnect between the level of risk in your portfolio and the level of risk you're comfortable with, make some changes -- because odds are we haven't seen the last of this phase of high market volatility.

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