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(Story updated to add that Bank of America has excess capital of $1.10 per share that could be returned to shareholders in 2012, analyst says.)
TheStreet) -- Last year was particularly dismal for actively managed mutual funds. But many fund managers have turned it around in 2012.
S&P Indices said Monday that, by its analysis, 84% of actively managed U.S. equity mutual funds underperformed their S&P market-cap benchmark in 2011, a much worse performance than in previous years.
And prior periods weren't impressive either, as 56% of actively managed stock funds underperformed their benchmarks over the previous three years and 61% over the five years through 2011.
Specifically, S&P found that 69% of large-cap funds, 70% of mid-cap funds and 51% of small-cap funds failed to beat their respective S&P benchmarks over three and five years.
Not surprisingly, investors are voting with their feet and pulling money out of actively managed stock funds as they are clearly questioning the value of paying high fund-manager fees when an index fund or exchange traded fund can do better for less.
Fund tracker Morningstar reported Tuesday that actively managed stock funds have suffered outflows of $134 billion over the past 12 months, while in contrast, passively managed funds, such as index funds or ETFs, have gained about $20 billion.
But there is a turnaround going on. Morningstar said 64% of diversified large-stock funds beat the Standard & Poor's 500-stock index in the first two months of 2012, versus only 20% in 2011.
And as so often happens in investing, many of the worst fund performers last year are putting in good, if not great, performances this year, which in some cases can be chocked up to timing.
Perhaps the most dramatic example of that is
Fairholme Fund(FAIRX), which is up 26% this year after losing 32% in 2011, equal to what it missed its large-cap benchmark by.
This year, though, its renowned manager Bruce Berkowitz is proving that timing is everything. He bet big on the financial sector beginning in 2010 and paid dearly for it, especially on
Bank of America(BAC - Get Report), which was an albatross for many mutual funds, losing 58% in 2011 and 11% the year earlier.
Berkowitz's other too-early pick, troubled retailer
Sears(SHLD - Get Report), which lost 58% last year, is up 153% this year. It was recently the fund's third-biggest holding at 10.7%.
Putnam Voyager(PVOYX) is another fund that has done an 180-degree turn this year, gaining about 18% after falling the same amount last year. It's been helped by its stock-picking acumen in coming up with
Assured Guaranty(AGO - Get Report) and
Advanced Micro Devices(AMD), which have solid gains in 2012.
Ariel Appreciation Fund(CAAPX), which lost 7.4% last year, but is up 13% this year, has benefited from its holdings of computer maker and retailer
Dell(DELL), the scientific instruments maker
Thermo Fisher Scientific(TMO) and the commercial real-estate-services firm
Jones Lang Lasalle(JLL).
eight stocks that have helped a variety of mutual funds turn around their poor 2011 performances, arranged in inverse order of the number of analysts' "buy" ratings: