Markets are moved by fear and greed, as the saying goes. And so are marketing departments. Gone are the days when fund companies could hype their chart-topping returns; for today s shell-shocked investors, fund companies have started to promise risk management and diversification in other words, safety. This happens after every bear market, says Lipper analyst Jeff Tjornehoj. It s as predictable as the sunrise.

And now, rising in the east: new funds from Putnam and Van Kampen, signaling that the era of fear-based fund investing is back. Putnam s four Absolute Return funds target specific three-year returns one, three, five or seven percentage points over the Merrill Lynch U.S. T-Bill index, a common measure of inflation. It s a strategy that s been used by pension funds and endowments for years. It s also fairly conservative, considering that T-bills almost never go negative but don t offer the returns of the stock market over time. They re an anchor against the wind, diversification from the volatility of a typical fund, says Putnam CEO Bob Reynolds.

Van Kampen s new Global Tactical Asset Allocation fund also sounds the lullaby of diversification. By investing in U.S. and foreign stocks, bonds, currencies and commodities, the fund promises to react nimbly to volatile markets. That allows it to operate within a risk-controlled framework, says fund manager Francine Bovich.

Both companies say they didn t launch their funds in response to the market crash that would be nearly impossible, since it takes several months for a fund company to create and test a new fund and get Securities and Exchange Commission approval. But Putnam s Reynolds acknowledges their timing couldn t be better: They re perfect for people who can t stand the volatility.

Though the new offerings might appeal to the skittish, they have risks, too. They can, of course, lose money, points out Tjornehoj. And they aren t cheap, with expense ratios of more than 1.65 percent. More important, he says, it s too late to protect against the crash that happened last October and the instinct to do so can actually encourage investors to be too conservative, precisely when stocks are poised to rally.