During last year's bull stock market, it wasn't hard for most mutual fund managers to look like geniuses.

But banks' stock fund managers emerged looking even a little smarter than their nonbank competitors.

The average bank equity fund delivered a return of 26.33%, topping the 24.65% gain achieved by its average nonbank rival, according to data compiled by CDA/Wiesenberger, a Rockville, Md., fund-tracking firm. (See tables starting on page 8A, covering funds with at least $25 million of assets.)

The banks' strong performance defied the conventional wisdom that often discounts bankers' ability to run top-flight stock funds.

"It's a little bit of a bad rap that bank funds have had" about performance, said Matthew R. Benko, research manager at CDA/Wiesenberger. "Maybe what we're seeing is banks crawling out of the hole they dug for themselves when they first got into mutual funds."

Banks' traditionally conservative approach to investment proved to be their trump card last year. Bank equity funds, which tend to be more heavily weighted with big-company stocks, got a boost from the blue chips, CDA analysts said. The S&P 500 Index, a closely watched barometer of large- cap stocks, rose 37.45% last year.

The big-cap emphasis helped propel Wachovia Corp.'s Biltmore Quantitative Equity fund to the top of growth and income funds, with a 38.56% return, CDA reported.

"Having a somewhat larger-cap bias helped because the larger stocks did better than the smaller ones in '95," said Timothy L. Swanson, a portfolio manager at Wachovia, which is based in Winston-Salem, N.C.

Though gratified by the fund's success, Wachovia executives have no special plans to tout it, choosing instead to build the overall image of the Biltmore funds family.

"We're comfortable with a message about a fund group," said R. Edward Bowling, senior vice president and manager of proprietary funds at Wachovia Investments. "If we started focusing on individual funds it would eat up my advertising budget very quickly."

Despite the general strength among big-company stocks, the top equity funds were mainly small-company and aggressive-growth funds that profited from positions in high-flying companies.

For instance, Bank of America's Pacific Horizon Aggressive Growth Fund garnered a 43.32% return, placing it No. 1 among maximum-capital-gain funds. "I own only two stocks over $2 billion" and none in the S&P 500, said Scott A. Billeadeau, the fund's portfolio manager.

Oddly enough, bank bond funds, with returns averaging 14.98%, trailed their nonbank competition, which turned in a 15.10% performance for 1995.

"On the fixed-income side, banks are perceived to have sort of an advantage, but that hasn't been borne out," said Jon Teall, Lipper Analytical Services, Summit, N.J.

One standout among bank bond funds was the 27.08% return turned in by the Sierra Trust Corporate Income Fund from Great Western Financial Corp., Chatsworth, Calif.

"You get a double-whammy when reps and wholesalers are able to talk about a fund that's performed extremely well," said Whitfield C. Wannamaker, senior vice president in charge of fund distribution for the funds.

"Name recognition in this business is important, particularly when you're a smaller fund family, like Sierra Trust, and trying to expand distribution outside the bank," Mr. Wannamaker declared.

The turnaround story of the year belongs to Huntington Bancshares, Columbus, Ohio. The bank's derivatives-filled Monitor Mortgage Securities Trust ended 1994 as the worst-performing bank fund of the year.

But Huntington stood by subadviser Piper Jaffray, whose $700 million derivative losses made headlines in 1994. It was rewarded in 1995 when the fund returned 31.10%

The same derivatives that imploded in 1994 "did great with the declining interest rates of 1995," said Norman A. Jacobs, president of Huntington's trust bank.

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