NEW YORK (CNNfn) - If market volatility has fund investors wondering which way stocks are heading, Franklin Templeton funds may have a good option.
The San Mateo, Calif.-based fund group this week introduced a fund that uses "long" and "short" positions to benefit in both up and down markets.
"If we feel it's a bull market, we can run the fund 90 percent long and 10 percent short," said Michael Ward, manager of the new Franklin U.S. Long-Short Fund. The fund debuted on Monday.
Also in this notebook, natural resources funds outperform and the spin-off saga at Janus takes another turn.
Most mutual funds hold "long" positions on stocks, meaning they buy stocks on the idea that the prices will rise in the future. When you short a stock, you are betting the price will fall. (Click here for a definition of short-selling.)
Mutual funds only recently started shorting stocks after a repeal of the so-called "short-short" rule in the Taxpayer Relief Act of 1997. The rule prevented funds from earning more than 30 percent of their profit from short-selling.
By contrast, bear funds are supposed to do well in down markets, and market-neutral funds try to "neutralize" risk with short-selling.
Ward said the fund's goal is to provide positive returns in both up and down markets, and to offer investors less volatility than the S&P 500 index.
The fund can invest in virtually any stock, growth or value, large or small. But Ward will focus on wireless companies and technology names.
Currently, the fund holds 55 percent long positions and 45 percent short positions. But that could change, depending on the market swings.
The long-short fund was one of a number Franklin Templeton introduced this week. The company also debuted Franklin Small Cap Growth Fund II; Franklin Technology Fund.
Ward redux: While Ward is introducing the new long-short fund, he's also watching another one of his funds soar to the top of the charts.
Ward, manager of the $44 million Franklin Natural Resources Fund (FRNRX), said supply and demand is driving his fund's performance, which is up 13 percent year to date.
Thanks to rising oil prices, natural resources funds have been impressive performers year to date. The sector is up 8.19 percent as of April 28, according to Morningstar.
"Crude oil supplies are low and demand has been increasing," said Ward, who runs the natural resources fund with Steve Land. "It's been mainly a supply issue that's making prices higher." 
Oil prices peaked at $30 a barrel earlier this year, the highest level in a decade.
Ward said crude oil prices were $25.90 a barrel on May 1.
The increase in oil prices translates into better earnings for a lot of companies, said analyst Michael Gaul, who follows the natural resources sector for Morningstar.
For example, names like Newfield Exploration (NFX: Research, Estimates) which is up 46 percent, and EOG Resources (EOG: Research, Estimates), up 37 percent, are enjoying huge returns as oil prices rise. Ward holds both of these names in his portfolio.
Another natural resources fund helped by higher oil prices, the $748 million Fidelity Select Energy (FSESX), is up 34.64 percent year to date. Two of its holdings, BJ Services (BJS: Research, Estimates) and Schlumberger (SLB: Research, Estimates), are each up more than 40 percent, Gaul notes.
So analysts note that investors are keeping an eye on sector funds amid the recent volatility that has rocked the Nasdaq and technology funds, which are up only 2.88 percent year to date.
"On down days, when people were selling out of technology, they were looking at the natural resources sector and other basic industries," Ward said. "The oil service stocks had a few really good days."
Click here to check mutual fund performance
"One of the good things about the sector is that it has a low correlation to a lot of other funds," Gaul said. "For the past month, they were a category leader. It was stupendous given what April was like" elsewhere in the market.
But Gaul warned that the sector can be very volatile, so investing in natural resources has to be done carefully. And you may already have exposure to energy and oil names in your portfolio through a general domestic stock fund that holds some of these stocks.
"If you look at the funds that are the best performers year to date, they are the most aggressive offerings, ones that have more exposure to energy overall and are some of the smaller energy names which are more volatile," Gaul said.
Saber rattling? Kansas City Southern Industries said in its latest annual report that it could fire Janus founder and chief Thomas Bailey if it wanted to - and that it would have little effect on the fund family.
But the company later said it has no plans to do it. The company was just trying to show who is "in control," a spokesman said.
The statement in the annual report was intended to help speed the Securities and Exchange Commission's review of how KCSI reports its ownership of Janus in connection with its spin-off of its financial service businesses, which include Janus, Berger mutual funds, Nelson Money Managers and DST Systems.
But it was perceived by many as an aggressive swipe at Janus, which many say would rather be spun off as an independent unit and whose support will be critical to making the new company, Stilwell Financial, a success.
"We disagree with the 10K certainly. It truly underestimates what the impact would be of losing Thomas Bailey," said Janus spokewoman Shelly Grice. (Bailey wasn't available for comment.)
Some industry analysts agree that KCSI incorrectly downplayed Bailey's importance - and to poor effect.
"It wasn't a nice thing to say or completely accurate ... It was bad form," said Morningstar analyst Russ Kinnel. Many of the portfolio managers who helped make Janus one of the hottest mutual fund properties around might leave if Bailey was fired, he said.
KCSI has said more than once it has no plans to fire Bailey and characterized him in its annual report as "one of the persons regarded as most responsible for the success of Janus." The company insists Bailey is very much in charge of Janus.
But KCSI also contends that even if it fired Bailey, Janus would retain its talent for several reasons: Janus' prominence; its top-of-the-scale compensation; and the fact that many employees would need to stick around long enough to exercise their stock options.
Family feuds are never pretty. But regardless of how the dispute between Janus and KCSI is resolved, Janus investors should not head for the hills - at least not yet.
"There's no real need to panic," Kinnel said, noting that investors should only consider taking money out of Janus if their fund manager leaves. But that is not a scenario he is predicting.
That's because KCSI, Bailey and other Janus managers have too much invested in what will become Janus' new parent company to let egos get in the way of a lucrative solution.
"They may not all walk away best friends," Kinnel said. But, he added, "It's in everyone's interest to reach a deal." 
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