A Fund That Divides to Conquer

The MainStay Balanced Fund splits its portfolio into 60% stocks and 40% bonds -- an approach that returned 23% in 2003

Striking a balance in volatile financial markets is never easy, but Joan Sebella, co-manager of the MainStay Balanced Fund (MBACX ), makes it look effortless. Her fund, formerly known as the Eclipse Balanced Fund, combines mid-cap value stocks with short- and intermediate-term bonds. It's A-rated by BusinessWeek for delivering excellent returns while keeping risk at a minimum. Its five-year annualized return is 7.9%, vs. a 3.2% gain for its typical peer during the period (for complete results of more than 5,000 funds, see BW Online's Interactive Mutual Fund Scoreboard.) BusinessWeek Reporter Kate Hazelwood recently caught up with Sebella in a telephone interview. Edited excerpts of their conversation follow:

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