Enhancing the Dow?

While most index funds are "passive," tracking a specific index, some new mutual funds "enhance" indexing with a little active management.

The goal is to dish up bigger returns or to guard against a market downturn.

Case in point: The Strong Dow 30 Value Fund (800-368-3863) hopes to beat the Dow Jones Industrial Average while falling less in down markets.

The fund invests only in the 30 stocks that make up the Dow. Half the money tracks the index with no active management. The rest invests largely in the weakest Dow stocks.

Wall Street calls these laggards the "dogs of the Dow." Each sports a high ratio of its dividend payment to its stock price. That's because the share price itself is low. That makes these stocks look cheap to some investors.

Fund co-manager Richard Moroney, who is also contributing editor of the newsletter Dow Theory Forecasts, is among them. "We're looking for good value" within the 30 stocks, he says.

That makes the fund attractive, he says, to someone who likes an index fund but wants some protection in case the market turns down.

The fund currently has a strong position in Caterpillar while shunning high fliers such as Procter & Gamble, Disney, Coca-Cola, and Wal-Mart.

Strong rolled out the new fund a month ago. So far, it is up 2.9 percent (minimum investment: $2,500, or $1,000 for an individual retirement account.) The Dow itself is up 3.6 percent.

Other fund families with enhanced index funds include Fidelity, Gateway, Nations, Payden & Rygel, Pimco, Smith Breeden, and Vanguard. But management expenses run higher than for strict index funds.