Sector funds were the top performers among bank- and thrift-managed equity funds in the period that ended Sept. 30, clocking the highest returns in the third-quarter, year-to-date, and one-year categories.

Driven by a late September spike in gold prices, First Union Corp.'s Evergreen Precious Metals Fund finished first among bank-managed funds in the third quarter, with a 24.55% return, according to the ranking by Rockville, Md.-based Wiesenberger, a Thomson Financial company.

One-year winners included Comerica Inc.'s Munder Net Net Fund, with a total return of 141.36%; U.S. Bancorp's First American Technology Fund, 129.52%; and Northern Trust Corp.'s Northern Technology Fund, 113.16%. (Performance tables begin on page 15.)

"Clearly 1999 has been a two-tiered market -- technology and everything else," said John B. Leo, a co-manager of the Northern Technology Fund. "So much of the media interest in investments is focused on the initial public offering market or Internet-driven news or communications developments," he said. "The excitement is not unnoticed by investors."

Winners aside, the third quarter was a rocky one, with bank-managed equity funds posting average losses of 5.49%. They beat the S&P 500 composite total return, down 6.25% in the quarter, but it lagged nonbank stock funds, which lost an average of 3.19%.

Fund managers and analysts attributed the disparity between bank and nonbank funds to the fact that banks have not, in general, invested as heavily in sectors such as technology.

On the other hand, growth in the small- and mid-cap sectors helped mutual funds beat the S&P 500, said Russel Kinnel, head of mutual fund research at Morningstar.com.

Few banks sponsor their own sector funds because few have enough demand for such specialized offerings, said J. Mark Naber, managing director of Optima Group Inc. in Fairfield, Conn.

"There's just a limited number of investors willing to invest that specifically," Mr. Naber said. "The worst thing that can happen is to launch a fund and have it stall at $10 million."

Part of the reason for that is size -- after all, few banks boast programs on the order of fund companies such as Janus or Fidelity. But bank funds also cater to a more risk-averse customer base.

Banks "tend to be dealing with less sophisticated, more novice investors," said Mr. Kinnel. "If you get someone switching out of a CD, their first fund shouldn't be a tech fund."

One of only three bank-run precious metals funds, the Evergreen Precious Metals Fund does not cater to typical bank investors, said fund manager John Madden.

He described his portfolio's target customer as a conservative investor hedging against inflation and stock market volatility. "It doesn't tend to be the average person buying growth and income funds for their 401(k)," he said. The fund had assets of $66.4 million on Sept. 30.

To be sure, "tech funds are no longer considered a super racy thing any more," said Mr. Kinnel. But he added that most bank programs do not pay enough to attract technical analysts, expertise currently much in demand.

U.S. Bancorp's First American Technology Fund does not have any dedicated analysts, said portfolio manager Roland P. Whitcomb. Rather, it "pools" research done by analysts working in other areas of the fund family.

"Each product of any size has someone who just does technology," Mr. Whitcomb said. "This way, we're able to create some economy of scale."

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