(January 3 – 09:20 ET) – “Last year was one small step backward for the average mutual-fund investor and a giant tumble into the red for unfortunate technology-fund holders.” Writes Aaron Lucchetti in today’s Wall Street Journal.

“The average diversified stock fund lost 1.67% in 2000, according to a preliminary estimate from Lipper Inc., a New York mutual-fund tracking firm. That falls well short of the double-digit annual gains the average stock fund enjoyed from 1995 through 1999.”

“But disappointing as it was, the average decline was less than the drop in many market indexes. And it was modest compared with that suffered by investors who bet big on technology funds. After a peak in the Nasdaq Composite Index in March, those funds experienced a gut-wrenching decline that left the average tech fund with a 33.8% decline in 2000, with many individual technology and growth funds falling more than that.”

“Last year’s market volatility has caused investors to pull back from putting new money into stock funds. Last week, the Investment Company Institute, a mutual-fund industry trade group, reported that net new cash going into stock funds in November, the latest month for which figures are available, had dropped 54% from October.”

“On Tuesday, the ICI revised that number to show an even greater investor pullback from stock funds. After a global mutual fund the group didn’t identify discovered a calculation error, the ICI said stock mutual funds took in only $5.7 billion in net new money in November, not the $8.82 billion previously reported. The revised figure represents a 70% decline in net new money moving into stock funds from October’s $19.16 billion.”

“The full-year investing results for mutual funds show that if 1999 was a tale of two markets — with technology in command and everything else following behind — 2000 was the same story in reverse.”

” ‘Tech got hammered, but the funds that were more diversified in a broader range of companies with stable earnings did better’ than their peers for a change, says Philip Edwards, managing director of fund services at Standard & Poor’s. Last year’s average fund return ‘wasn’t anything to write home about,’ but relative to the technology-laden Nasdaq index, it was ‘a great deal. ‘ “