Bank-managed mutual funds are supposed to be plodders, but last year's top performer churned out a total return of nearly 193%.

Unsurprisingly, it was a technology fund. Such funds were the bank-fund stars last year, followed closely by small-cap funds heavily invested in technology.

U.S. Bancorp's First American Technology Fund was the champion, with a total return of 192.59%, according to Rockville, Md.-based Wiesenberger, a Thomson Financial company. Comerica Inc.'s Munder Net Net Fund came in second at 173.65%. Allfirst Financial Corp.'s Ark Small Cap Equity Fund was third, at 150.08%.

Those three funds were also the bank leaders in the fourth quarter. U.S. Bancorp is based in Minneapolis and Comerica in Detroit, though its Munder Funds operate out of Birmingham, Mich. Allfirst, owned by Allied Irish Banks PLC, is based in Baltimore.

Though bank funds typically target conservative investors, technology funds - despite their risks - have a place in a diversified portfolio, said Roland P. Whitcomb, a portfolio manager for U.S. Bancorp's champion fund.

For example, he recommends combining investment in the technology sector with a value approach.

The important thing for the investor, he said, is to be aware of a fund's holdings. One risk of mid- and small-cap products is that it is hard to see how much technology they invest in, Mr. Whitcomb said.

Many growth products have 50% or more of their investments in technology stocks, he noted. "That's fine," Mr. Whitcomb said, as long as the customer is not "an accidental tech investor."

Skyrocketing returns have sparked intense demand for some of the riskiest funds. Luciano Moschetta, vice president and chief compliance officer for Quick & Reilly and Fleet Securities Inc., the New York brokerage unit of FleetBoston Financial Corp., said "frenzy over the Internet" prompted a June memorandum reminding brokers and managers to make sure customers understood the risks of Internet funds.

But technology funds as a whole have not prompted the same concern, Mr. Moschetta said.

"Technology funds have been around a lot longer," so investors can look at their track record, he said. As for potentially risky small-cap funds, software tools provide information on their holdings, he noted.

And technology funds are often more diversified than one might think.

For example, though the mission of Munder's Net Net Fund is to invest in companies that stand to benefit from the Internet, that could mean anything from an Internet company to off-line companies moving business on-line, said Alan Harris, the fund's senior portfolio manager.

"We invest across a wide variety of maturities," including "new and emerging and well-established companies," said Mr. Harris. "Over time, we would expect more traditional companies to show up in our portfolio."

H. Giles Knight, a portfolio manager of Allfirst's Ark Funds, said that the Small Cap Equity Fund - which currently has 75% of its holdings in technology and telecommunications - would seek to improve performance through a wider range of investments. For instance, the fund has started investing in biotech and energy stocks.

But Mr. Knight said new uses for semiconductors and the Internet would continue to drive profits.

"It looks like it's going to last," he said.

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