Best of the best: Top managers' August picks

As the Dow, Nasdaq and S&P head for a second straight week of losses for just the fourth time this year, two top-rated fund managers have weighed in with some longer-term advice.

Gregg Fisher, manager of the Gerstein Fisher Multi-Factor Growth Equity Fund, and Matt Litfin of the William Blair Small Mid-Cap Growth Fund are rated five-star money managers by research firm Morningstar.

U.S. stocks are no longer the only game in town, Fisher said.

"Now is a good time to take a look at where you are strategically and trim down U.S. exposure and add exposure to foreign markets, bonds and other asset classes," he said during CNBC's "Power Lunch" on Friday. It's a "good time to rebalance your portfolio," he added.

Litfin is more sold on sticking with U.S. stocks—for now at least—and said, "When you step back and look at the U.S. market, it does look pretty attractive to us. Inflation remains low—that's especially true in food and energy."

The models at William Blair show consumer discretionary stocks are stretched, but Litfin said he likes Under Armour—even with the stock up 16 percent over the past month and 43 percent so far this year. Though it won't overtake Nike anytime soon, he said, he thinks the space is big enough for both companies.

Litfin is also bullish on financial stocks, especially CBOE Holdings, which he called a "very strong, durable business franchise." CBOE is up 62 percent this year.

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Litfin also sees an improving budget picture in the U.S., although still far from ideal. But the shrinking deficit is a good sign, he said, especially for long-term investors.

In the short term, he said " tapering is coming," referring to an easing of the Fed's bond-buying program. Litfin said that could mean a drop in U.S. stocks.

Once the Fed pares back the program, the market will get used to it—much like children get used to bathing.

"You beg them to take a bath," he said. "They don't want to. They finally get in and play for half an hour and you can't get them out. The market needs to enter the tapering period, see what it's like, look around and realize we're OK."

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The prospect of tapering makes Gregg Fisher of Gerstein Fisher more wary of U.S. stocks. "Tapering, interest rates and inflation, these are big issues," he said. "We're looking for assets without exposure to leverage."

Fisher's top holdings are Apple, IBM and Google, with technology making up 23 percent of his portfolio. His fund is up 19.5 percent this year.

Litfin is up 26 percent year to date, with almost a third of his fund invested in industrials.

By CNBC's Jason Gewirtz