By Kirk Shinkle

Slowdown? What slowdown?

Today's fund news:

Just look at bond giant Pimco, where managers continue to move into U.S. Treasuries. David Fisher, who runs Pimco's global product management, tells Bloomberg that U.S. bonds and the dollar will continue to be the spot investors land when seeking security. (Other countries where Pimco recommends bonds: Canada, Australia, China, South Korea, Brazil, and Mexico).

"The U.S. remains the flight-to-quality country," Fisher said. "The dollar remains the world's most important reserve currency. The euro is unlikely to take that mantle anytime soon. That makes U.S. Treasuries a default flight-to-quality asset."

It's already been a great year for Treasuries, which quietly posted 5.9 percent returns in the first half, Bloomberg notes.

Bloomberg (via Investment News): Pimco bailing on European bonds, piling into U.S. Treasuries

There's an America-first theme in the stock world too. It's small-cap equity funds, which so far this year have been among the best-performing sectors of the mutual fund world, according to Morningstar. Despite equity markets that are still not looking terribly cheap by most measures, lesser-known names could continue to climb if investors keep looking stateside for buying opportunities, according to LPL Financial, which writes in its mid-year outlook:

With the likely continuation of the headwinds created by slowing growth in Europe, smaller cap companies could be relative return winners since they are more domestically-focused, and they could be better insulated if a contagion develops. We continue to believe the U.S. economy will remain more robust and consistent than the rest of the developed world, especially compared to Europe. Since small cap companies have more domestic sales exposure than their large cap peers, they have greater leverage to increasing demand in the U.S. economy.

LPL Financial: 2010 Mid-Year Outlook

Morningstar: Category returns through 7/12.

Unfortunately, all this love for the USA isn't exactly a vote for a surprise recovery for the American economy. It's really more of a safety play in a market that remains both highly volatile and very fragile. Investors are still bearish on global growth (and pretty much nobody expects a late-year pickup in U.S. growth).

The latest Bank of America Merrill Lynch survey of investor confidence shows investors are more worried about the outlook for U.S. equities than at any time since November 2006. A net 14 percent of respondents in the July survey said U.S. stocks were the region they'd most like to underweight. In June, 14 percent called the U.S. their most overweighted sector. Managers have already cut their U.S. exposure, with a net 7 percent of respondents overweight U.S. stocks, down from a net 20 percent in June.

BofA Merrill Lynch: Fund Manager Survey Finds Bear Market Sentiment Is Back

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Investing - Mutual Fund Buzz: America the Beautiful | Successful Investing

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