Co-manager Don Yacktman views stocks almost like bonds: He calculates an expected rate of return and adjusts for risk. "As you go down in quality, you want to have more cushion in rate of return," he says. That risk-averse approach means he'll consider a business with high capital requirements or high sensitivity to economic fluctuations-- but rarely both. As a result, Yacktman says, the fund steers away from industrials and has "a bias against banks, which I think are black boxes." The fund holds 33 stocks, with more than 10% of assets each in News Corp. and PepsiCo. The former, he says, trades below where it did two years ago and looks to offer a strong rate of return despite recent gains. He calls Pepsi shares "just a solid triple-A."
