The market’s performance doesn’t always correlate with the economy, so investors who are anxious about uncertainty in the global economy shouldn’t necessarily abandon equities. Instead, it’s more prudent to select a mutual fund that participates in the market’s ascent during bullish periods, while avoiding the market’s trough during downturns. Mairs & Power Growth (MPGFX) has produced an enviable top-decile performance in Morningstar’s large-cap blend category over both short-term and long-term periods with such an approach.

The word “growth” may be in the name of the fund, but management actually pursues investments across the full style spectrum from growth to value. And even though Morningstar classifies the fund in its large-cap blend category, small- and mid-cap stocks comprise a substantial slice of the fund’s holdings, because management recognizes that smaller-cap equities produce superior gains over the long term. In the short term, of course, small-cap stocks can be quite volatile, so management has anchored its portfolio with a large-cap sleeve to bolster the fund’s performance during short-term periods of volatility.

A slight majority of the fund’s assets are in large-cap equities, while nearly 30 percent of its holdings are in mid-cap stocks, and 17 percent of assets are in small-cap names. Management runs a fairly concentrated portfolio with just 47 holdings altogether. But these are clearly high-conviction selections, as the fund has an extraordinarily low annual turnover rate of only 2.8 percent.

Management favors firms with reasonable valuations, predictable earnings, above-average returns on equity, strong balance sheets, and competitive advantages in their respective markets. The fund is fully allocated to domestic equities and has a special focus on small firms that operate in the Upper Midwest near its home office. Because of the fund’s Midwest orientation, management significantly overweights the more cyclical sectors that tend to dominate the region, such as basic materials and industrials. But the fund also holds nearly 18 percent of assets in the defensive health care sector.

Even with a concentrated portfolio that holds many smaller-cap stocks, the fund has still managed to incur slightly less volatility than the S&P 500 over the 10- and 15-year trailing time periods, while keeping its volatility roughly in line with the market over shorter-term periods. During the Great Recession, the fund’s largest rolling 12-month loss was 39.7 percent versus the S&P 500’s loss of 43.2 percent.

The fund tends to lose less than the market during downturns, as evidenced by the fact that it outperformed the market by 8.5 percentage points in 2008. But it also moderately lagged the market in years such as 2003 and 2009 in which lower-quality stocks led the market off its bear market bottom. However, this approach has enabled the fund to beat the market over the medium term and trounce the market over the long term. Over the trailing 15-year period, for example, the fund beat the market by a wide margin of 3.6 percentage points annually.

Mairs & Power Growth is noteworthy for being one of the rare funds that provides both offense and defense, which makes it suitable as a core holding.