It's after the crowd thins that the party gets interesting.

Who won, lost


Gold mining: Last year, when the price of gold had its worst performance since 1981, the average precious metals stock fund lost 48.8%. But managers say that helped make mining stocks more attractive. Of the 25 funds with the top first-quarter returns, 12 specialize in gold-mining stocks.

Muni bonds: Detroit's bankruptcy last year and rising interest rates have spooked investors away from municipal bonds, which are issued by local governments. But those fears were unwarranted, at least in the last quarter. Rates fell, and the default rate remains low. That helped the average long-term national municipal bond fund return 4%.

Bond funds: Last year, many experts heralded the "Great Rotation" of investors into stock funds from bonds. But increased anxiety pushed up demand for bonds, which drove down yields. Intermediate-term bond mutual funds, the largest type by assets, delivered an average return of 1.9%.


Latin America: After investors yanked $1.4 billion last year, Latin American stock funds have continued to disappoint and lost an average 1.1% last quarter. Investors are worried about how the region will deal with a global economy supported by less stimulus from the Federal Reserve.

Asia: Worries about slowing economic growth in China reverberated. Chinese stock funds lost an average of 4.3% last quarter. Japanese funds, which struggled with worries about economic reforms, lost 3.8%.


Such was the case with mutual funds last quarter. The types of funds that did best were often those that investors rushed to exit in 2013. Mutual funds that invest in the stocks of mining companies were the headliners: They made an average of 12.1 percent, the most among the 103 fund categories that Morningstar tracks and more than six times the return of the S&P 500 index. The jump came after investors pulled a net $2.1 billion from the category last year. The top of the leaderboard for first-quarter fund returns provides another example of how sharply fortunes can swing.

Many of the top-performing fund categories in the first quarter were ones that tend to be popular when worries are rising, such as gold-related and bond funds. Investors have felt more reason to worry this year as concerns flared about tensions in Ukraine and about disappointing economic reports in China and the United States. The VIX, an index that measures how nervous investors are about big price swings upcoming for the S&P 500, jumped in February to its highest closing level since 2012.

Even though the S&P 500 index had its smallest quarterly move in the last six, various mutual fund categories still posted big moves in both directions.

"I think we're into a stock picker's market and a bond picker's market and a country picker's market," says Jack Rivkin, chief investment officer at Altegris, which runs several alternative mutual funds. Unlike last year, when 91 percent of the stocks in the S&P 500 rose together, Rivkin says, "we're going to see some difference in performance among individual countries, individual sectors and individual companies."