The Calamos Market Neutral Income Fund (CVSIX), for example, pairs a company's convertible bonds with a short position in the stock. It also uses covered calls, which provide income -- although the downside is that the stock can be called away (bought) if it rises to a specified price. "Investors tend to use this fund as a way to stay in the market and be defensive," says John Calamos Sr., the fund's founder. Calamos Market Neutral is down about 3.6% this year, but still more than nine percentage points ahead of the S&P.

One fund the firm advises is the Old Mutual Analytic Defensive Equity (ANDEX), which does some shorting. (The fund has just been renamed Old Mutual Analytic.) De Silva wouldn't discuss any specific short positions. But as of June 30, the fund's short holdings included Mylan Laboratories (MYL), Leucadia National (LUK) and Louisiana-Pacific , among others, according to the fund's Website.

One fund the firm advises is the Old Mutual Analytic Defensive Equity (ANDEX), which does some shorting. (The fund has just been renamed Old Mutual Analytic.) De Silva wouldn't discuss any specific short positions. But as of June 30, the fund's short holdings included Mylan Laboratories (MYL), Leucadia National (LUK) and Louisiana-Pacific , among others, according to the fund's Website.

One fund the firm advises is the Old Mutual Analytic Defensive Equity (ANDEX), which does some shorting. (The fund has just been renamed Old Mutual Analytic.) De Silva wouldn't discuss any specific short positions. But as of June 30, the fund's short holdings included Mylan Laboratories (MYL), Leucadia National (LUK) and Louisiana-Pacific , among others, according to the fund's Website.

The Aberdeen Long Short Equity Fund (MLSCX) has about 40% of its portfolio in short positions. "That's relatively high for us," says Chris Baggini, the co-portfolio manager. "We're very mindful that stocks are down a lot" but "the fundamentals aren't supporting stocks, even at current levels." He cites weak profit growth as a key problem. Baggini wouldn't discuss current shorts, but the fund's Website says that, as of June 30, it was betting against Bank of America (BAC), Sprint Nextel (S), J.C. Penney (JCP), American Express (AXP) and Starbucks (SBUX), among others. The Bank of America, Penney and Sprint positions were recently closed.

The Aberdeen Long Short Equity Fund (MLSCX) has about 40% of its portfolio in short positions. "That's relatively high for us," says Chris Baggini, the co-portfolio manager. "We're very mindful that stocks are down a lot" but "the fundamentals aren't supporting stocks, even at current levels." He cites weak profit growth as a key problem. Baggini wouldn't discuss current shorts, but the fund's Website says that, as of June 30, it was betting against Bank of America (BAC), Sprint Nextel (S), J.C. Penney (JCP), American Express (AXP) and Starbucks (SBUX), among others. The Bank of America, Penney and Sprint positions were recently closed.

The Aberdeen Long Short Equity Fund (MLSCX) has about 40% of its portfolio in short positions. "That's relatively high for us," says Chris Baggini, the co-portfolio manager. "We're very mindful that stocks are down a lot" but "the fundamentals aren't supporting stocks, even at current levels." He cites weak profit growth as a key problem. Baggini wouldn't discuss current shorts, but the fund's Website says that, as of June 30, it was betting against Bank of America (BAC), Sprint Nextel (S), J.C. Penney (JCP), American Express (AXP) and Starbucks (SBUX), among others. The Bank of America, Penney and Sprint positions were recently closed.

The Aberdeen Long Short Equity Fund (MLSCX) has about 40% of its portfolio in short positions. "That's relatively high for us," says Chris Baggini, the co-portfolio manager. "We're very mindful that stocks are down a lot" but "the fundamentals aren't supporting stocks, even at current levels." He cites weak profit growth as a key problem. Baggini wouldn't discuss current shorts, but the fund's Website says that, as of June 30, it was betting against Bank of America (BAC), Sprint Nextel (S), J.C. Penney (JCP), American Express (AXP) and Starbucks (SBUX), among others. The Bank of America, Penney and Sprint positions were recently closed.