Phil Davidson, co-manager of the American Century Equity Income fund, mentions "downside" so often that you might start to think he needs some Zoloft in his coffee. But Davidson isn't dour - he's merely obsessed with avoiding stocks that are ripe for a tumble.

Davidson and his co-managers are willing to buy solid stocks of all sizes for their $6.2 billion mostly large-cap portfolio, as long as they find that margin of safety. They also mix in some convertible securities for added income and lower volatility. That kind of conservatism makes the portfolio less likely to keep up during torrid bull runs, but it also serves to limit losses, a key to long-term outperformance. The fund's worst loss in any one calendar year was a 5 percent slide in 2002, a year when the average large-value fund sank 18 percent. Over the past ten years, the fund has gained nearly 13 percent a year, with dollar-weighted returns of nearly 12 percent.

Limited risk is one big reason the managers have loaded up on shares of General Electric. The bluest of blue chips has a AAA balance sheet and carries a 2.8 percent dividend yield. That's why Davidson is only too happy to hold on to GE, his top holding, for the long term. "The probability of success with this investment is so high that I don't care if it goes sideways for another year," says Davidson.