IDEAS ON WHERE TO INVEST

returns has always been a challenge for investors no matter what's happening

in the market. So, if you're looking for a couple of ideas, here's what some

pros are suggesting.

Sheldon Jacobs, publisher of The No-Load Fund Investor, thinks one sector

ripe for "outsize returns over the next five-to-ten years" is health and

biotech funds.

His reasoning? On the plus side is demographics, thanks to the aging baby

boomers. And, the defensive nature of these stocks.

Unlike cyclical companies, health and biotech stocks are defensive. Meaning,

people typically will spend money on their health and health care no matter

what's going on in the economy.

Then there is profitability. Forget the Internet stock bubble, in which

dreams were played and not much made, there are many established health and

biotech companies out there with track records that make viable products.

And, there is also the promise that the brand new world of genomics offers.

Plus, the potential profitability if cures for chronic diseases, like

Alzheimer's and cancer, are found.

On the downside, a couple of the many risks include the fact that the price

earnings ratio on health and biotech stocks -- and the funds investing in

them -- is higher than average. And, the risk factor in developing new drugs

is also high. "Right now, about one in 50 survive from scientific idea to

human testing, " says Jacobs. "Even from that point, there is a tremendous

attrition rate so that for every compound that starts in preliminary human

testing, the FDA approves only about one in 10."

Even though this sector can be a risky one, if you find the health and

biotech arena exciting, Jacobs suggests the best play is a diversified one.

That is, look for a fund that not only diversifies its holdings by companies

but among various sub-sectors.

His recommendation for a conservative play is the Vanguard Health Care Fund.

Its portfolio currently has the bulk of its assets -- 68 percent --

invested in health care companies. Middle of the road suggestions include

Invesco Health Sciences Fund, currently it has 56 percent of its assets

invested in pharmaceuticals and 31 percent in biotechnology health care

companies; T.Rowe Price Health Sciences Fund, biotechnology companies make up

37 percent of its portfolio and pharmaceuticals 33 percent; and American

Century Life Sciences Fund with 44 percent of assets invested in

pharmaceuticals, and, 23 percent in medical providers.

For those wanting to take maximum risk, his suggestion is the Genomics Fund.

Pharmagenomics make up 45 percent of its portfolio, followed by 31 percent

invested in monoclonal antibodies companies.

Should you decide to research any of Jacobs' fund suggestions, you'll find

all of their year-to-date total return performance numbers in minus

territory. Don't let that alarm you. While it's impossible to predict the

future returns on any type of mutual fund, it's not unusual to find this

year's dog funds performing well on future year's performance lists.

For those interested in trends, Montgomery Asset Management thinks that

there's a new mega-trend on the horizon. In a white paper recently released

by this San Francisco based company, the potential of alternative energy

sources are addressed in their report titled, "New Power -- The Next

Frontier."

The experts at Montgomery see this mega-trend as world-wide in scope and

being driven by a number of factors. "When deregulation, technology and

innovation combine in a major industry to lower prices, improve quality and

simplify as well as personalize use, consumer adaptation can be fast beyond

anyone's expectations," says Glen Hilton, Montgomery's senior analyst and New

Power expert.

Technologies that the report thinks will shape the new power industry of

tomorrow include: distributed power, it's designed to decentralize power at

its source; clean power, like marketing surge-free and continuos power

supplies to power-dependent users; green power, or renewable power ; and

e-power which leverages power moving it directly to consumers and away from

suppliers.

And there you have it; new ideas to think about, cautiously.