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Last year, James Benham, when asked to pick his favorite Benham Group fund for 1995, named Target Maturities 2020. It was an inspired choice. The sharp decline in interest rates sent the fund up 61.3 percent, making it easily the best-performing bond fund. It beat 99 percent of all stock funds, too.

Now Benham finds the outlook a lot murkier."We're in the fifth year of an expansion and, like everything else, expansions get tired. That brings up my defenses."

Benham's new favorite is Benham Capital Manager, an asset allocation fund that owns a wide variety of securities, stocks and bonds, domestic and foreign.

"When one asset class zigs, another will zag," Benham explains. "I'm not sure the party is over, so I want to be there for the festivities. But I also want to get home safely."

Benham's response is part of Mutual Fund News Service's (P.O. Box 937, Bodega Bay, Calif. 94923) annual survey of mutual fund leaders, who are asked: "If you had to put your own money in just one of your funds for the coming year, which would it be?" The answers reflect the mood of investment executives who monitor every type of fund daily. By and large they are fairly cautious now.

Victor Ugolyn of the Enterprise Group, for example, picks ENTERPRISE MANAGED PORTFOLIO, whose objective is to preserve capital and outperform the popular indices regardless of the broad market direction. In 1995, the fund rose 37.6 percent, despite having 20 percent or more in cash for much of the year.

Edward Boudreau of John Hancock Funds picks a fund famous for investing in some of the strongest and steadiest companies in America: JOHN HANCOCK SOVEREIGN INVESTORS FUND. It won't buy a company unless it has increased its dividend in each of the last 10 years. "These companies have been ignored," says Boudreau. "They could do extremely well as market adjustments continue in cyclical sectors and technology."

Relatively cheap stocks are also the choice of Ronald Schroeder of J. & W. Seligman & Co. "Large capitalization stocks have benefited in recent years from corporate restructuring trends, while small-cap companies outperformed in 1995," he says. "This gives SELIGMAN CAPITAL FUND, which is heavily invested in mid-cap growth stocks, a great current opportunity."

STEINROE CAPITAL OPPORTUNITIES FUND was up almost 51 percent in 1995, compared with 32 percent for the average capital appreciation fund. Kenneth Leibler of Liberty Financial Companies, SteinRoe's parent, still likes it because he believes growth stocks will have another good year.

Finally, Shelby Davis of Davis Selected Advisers puts his money on DAVIS INTERNATIONAL TOTAL RETURN FUND.