If Aggressiveness, Volatility Don’t Scare You . . .

So you’re a die-hard bull. You’re convinced the Dow Jones industrials will hit and pass 10,000 in no time. You want to get aggressive. Or perhaps, like many people, you don’t have a clue where the market is going. But like any prudent investor, you want a portion of your portfolio allocated in aggressive mutual funds whose returns will bulge if indeed the market soars further.

Which funds should you consider? For the risk-taking, flat-out bullish part of your stock portfolio, many fund experts suggest U.S. funds that exploit volatile market segments. That would include funds that specialize in “momentum” investing--chasing hot stocks as they rise.

Likewise, for foreign-fund choices, aggressive investors need to be in funds willing to take a stand, which may involve investing in foreign markets or individual stocks that many or most other fund managers shy away from.

The point is, “if you think there is still room to run in this bull market, there are plenty of opportunities” to be aggressive with funds, says Don Phillips, president of fund tracker Morningstar Inc.

The following list highlights some aggressive-fund picks for investors who are willing to take the risk for the chance to earn high returns:

Domestic Funds

* Van Wagoner Mid-Cap. This is a relatively new “high-octane fund,” weighted toward the smaller end of mid-size stocks, says Phillips.

The fund’s manager, Garrett Van Wagoner, buys stocks of companies that are growing extraordinarily fast, often in the high-technology area. That can mean huge gains--but also deep declines when the market temporarily turns against such high-flying shares.

In the first half of 1996, Van Wagoner saw his fund gain about 40%--only to plunge, then finish the year up 24%. That volatility has continued this year; the fund is up just 9.3% year-to-date, about half the gain of the average general U.S. stock fund.

“This is not a good first fund,” Phillips says. “This is a fund for someone with all the bases covered.”

Still, Van Wagoner has a proven record for exceptional results with his often audacious and risky growth-stock strategy, Phillips says.

* PBHG Growth. Like Van Wagoner, PBHG Growth’s manager, Gary Pilgrim, follows a bold investment style that focuses on fast-growing companies generally with annual revenue of less than $2 billion--firms such as Altera, PeopleSoft, Chesapeake Energy and McAfee Associates.

The fund is down modestly year-to-date as many smaller growth stocks have been battered in the market. Yet the fund’s five-year return--242% through June 30--still is far ahead of the Standard & Poor’s 500 index, Phillips notes.

In recent months, the upturns have seemed shorter and the downturns more extreme for this fund, but a continuing bull market could bring PBHG back to prominence, he says.

* Vanguard Horizon Capital Opportunity. “This has not been a fund that has set the world on fire,” says Phillips. The fund’s weakness this year in part reflects a large position in waste management company Republic Industries, which fell on news of a failed takeover.

However, in a frothy market this is going to be the kind of fund that will succeed because of its aggressive style, Phillips says. Whereas parent Vanguard is known for its staid index funds, Horizon Capital is actually managed by Husic Capital in San Francisco and is known for a risky growth-stock style that focuses on small- and mid-size companies such as Washington Mutual, now the nation’s largest thrift.

Philips thinks this fund is a good bet for hard-core bulls.

* Selected American. Kurt Brouwer, a principal at Brouwer & Janachowski, a San Francisco money management firm, likes this fund’s emphasis on American financial services companies, particularly the banks and others that are benefiting from relatively low interest rates and Americans’ growing retirement plan assets.

The fund’s long-term success, in fact, has been based on its managers’ willingness to bet substantial assets on stocks they believe have the best prospects.

* Janus Twenty. Few funds concentrate their assets the way this one does--investing mainly in 20 to 30 stocks.

At one point the fund had 57% of its assets in just 10 stocks, including Wells Fargo, Citicorp and Nike. When its picks are hot, so is the fund--and that has definitely been true in recent years.

Management hasn’t been afraid to swap picks when better deals come along. Last year IBM was a big name in the portfolio, but it was swapped this year for Lucent Technologies.

Burton Berry, editor of NoLoad Fund X, a mutual fund newsletter in San Francisco, likes this fund, but he cautions investors to keep a watchful eye, as fund manager Tom Marsico recently quit.

That doesn’t necessarily mean the fund’s performance or strategy will change a lot, Berry said, because the new manager was trained by Marsico.

* Rydex Nova. “This one is a real pistol--a crap-shooting fund,” says Berry. Nova is only for investors who are comfortable with a super-aggressive strategy that involves exotic options and futures.

Nova basically uses S&P; 500 options and futures contracts to try to produce performance that is 50% greater than the S&P; 500 on the upside. But that means the fund can do 50% worse on the downside.

“If the market goes up, they go up, but if the market goes down, it goes down more,” Berry says.

That makes this fund one for raging bulls only.

International Funds

* Montgomery Emerging Markets. Whereas most emerging-market funds invest in stocks of 20 to 25 nations, this fund invests in 30 to 35.

The net result, according to Morningstar’s research, is that when the smaller, more obscure emerging markets do well, this fund runs ahead of its emerging-market fund peers.

Thus, an investor betting on a continuing bullish trend for emerging markets worldwide might be interested in this very diversified fund, says Phillips.

* Warburg Pincus International Equity. With this fund, “you’re betting that international stocks will do reasonably well,” says Brouwer. But you’re also investing for the sometimes offbeat stock-picking style of manager Richard King.

King isn’t afraid to invest away from the herd--recently, for example, in beleaguered Japanese stocks.

Shareholders’ reward: a five-year return of 102% through June 30, compared with 80% for the average international fund.

* Janus Overseas. Manager Helen Young Hayes takes an unusually aggressive growth-oriented approach compared with most international-fund managers.

So far, so good: Her ability to find fast-growing entrepreneurial small companies in the international arena has produced a spectacular run for the fund, says Brouwer.

The fund’s two-year average annual return: a blistering 28.5%, compared with 13.1% for the average international fund.

* Warburg Pincus Emerging Markets. This relatively young fund, co-managed by Richard King, has taken major positions in the Pacific Rim markets, including Hong Kong and Taiwan.

Although many Asian markets have suffered this year, aggressive investors who believe that the 21st century should belong to Asian economies may find a good home for their money here, Brouwer says.

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Coming soon in this column: Experts will suggest funds for the conservative equity part of your portfolio.

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Times staff writer Debora Vrana can be reached at debora.vrana@latimes.com. She welcomes suggestions for Fund Spotlight columns.