Let's get 1994 off to a good financial start. You can do so by making sure you're invested in the top performing mutual funds.

January is the best time of year to do your mutual fund housecleaning. Mutual funds have already paid out their 1993 capital gains and dividend distributions, so you can go ahead and invest in new funds without worrying about getting hit with a big tax bill. You can also sell out any positions with mediocre funds, since any capital gains taxes you create won't be due until April 15, 1995.MY CURRENT ALLOCATIONS for moderate investors (if you would like a free copy of my model portfolios for conservative and aggressive investors, call 800-445-5900) is 50 percent in domestic stock funds, 30 percent in international stock funds and 20 percent in junk bond funds.

As long as interest rates remain low and corporate earnings continue to show growth, there is little risk for anything more than temporary corrections. Despite the doomsday prediction of bears (who have been out of the market and missed lots of profits), I still like the domestic stock market. My favorite stock funds today are:

Please see Donoghue's Domestic Dozen chart

International funds are hot. Over the past 12 months, many of the better international stock funds are up more than 35 percent and the prospects look just as good today. The rise of capitalism in China is fueling the Pacific Basin and declining interest rates in Europe are the fuel for the Euro-bull market.

Please see Donoghue's International Dozen chart

Junk bonds are the safest sector of the fixed-income market to be in today. That's right - the safest. "Bill, you must be nuts," some of you might say. The fact is that junk bonds are historically the least sensitive to rising interest rates. Junk bonds will lose less money than any other bonds, including government bonds, when interest rates rise.

Junk bonds will benefit from our country's economic recovery. Many of the "fallen angel" corporations will see their prospects improve as the economy does, and many should, therefore, see their credit ratings improve. Some will rise from the junk category to investment grade. There isn't a Donoghue Dozen of junk bonds, though. I only have four favorites.

Please see Junky is hunky-dory chart

Keep in mind, the above asset allocation and fund recommendations are for moderate investors. The very aggressive and very conservative are a different story.

Of course, all of these funds are no or low-load. Invest with the best and forget about the rest!




Fund Name Total Beta 800No.

PBHG Growth 63.5 pct. 1.43 809-8008

Fidelity Capital Appreciation 32.3 pct. 1.00 544-8888

Oakmark Fund 30.9 pct. 0.53 GROW-OAK

SAFECO Equity 30.7 pct. 1.07 426-6730

Loomis Sayles Small Cap 25.6 pct. na 633-3330

Berger 101 25.2 pct. 0.96 333-1001

INVESCO Emerging Growth 23.8 pct. na 525-8085

SteinRoe Capital Opport. 22.2 pct. 1.37 338-2550

Legg Mason Special Invest. 21.5 pct. 0.86 822-5544

Babson Value Fund 21.2 pct. 0.98 422-2766

T. Rowe Price New Horizons 20.4 pct. 1.36 638-5660

IAI Value Fund 20.4 pct. 0.91 945-3863

( - Nov. 29, 1992, through Nov. 29, 1993.)



Fund Name Total Return 800No.

Oakmark International 49.6 pct. GROW-OAK

T. Rowe Price New Asia 49.3 pct. 638-5660

Lexington Worldwide Emerging 38.9 pct. 526-0057

Vanguard World Int'l Growth 38.6 pct. 662-7447

Fidelity Pacific Basin 38.6 pct. 544-8888

Acorn International 38.5 pct. 922-6769

T. Rowe Price Int'l Discovery 35.8 pct. 638-5660

Montgomery Emerging Markets 35.7 pct. 428-1871

Warburg Pincus International 34.7 pct. 888-6878

Strong International Stock 32.2 pct. 368-3863

Fidelity Worldwide 31.5 pct. 544-8888

IAI International 30.9 pct. 945-3863

( - Nov. 29, 1992, through Nov. 29, 1993.)


Junky is hunky-dory

Fund Name Total Yield 800 No.

Fidelity Capital & Income 25.2 pct. 7.05 pct. 544-8888

T. Rowe Price High Yield 21.1 pct. 8.65 pct. 638-5660

Vanguard F/I High Yield 18.0 pct. 8.34 pct. 662-7447

INVESCO F/I High Yield 14.3 pct. 7.61 pct. 525-8085

( Nov. 29, 1992, through Nov. 29, 1993.)