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10 Stocks That Boosted First-Quarter Mutual Fund Returns (Update1)


(Story updated to add that Bank of America CEO got $7 million in compensation for 2011.)

BOSTON ( TheStreet) -- With risk-on trading since the beginning of this year, an environment in which stock-pickers should shine, the first-quarter returns for actively managed U.S. mutual funds was only mediocre.

They rose an average of 12.8%, compared with the S&P 500's 12.2% gain. So it's easy to see why investors continue to move into passively managed funds such as index or exchange traded funds.

And only 20 actively managed domestic funds with assets over $2 billion had returns of better than 18% in the quarter, according to a screen of Morningstar's mutual fund database.

Those increases likely indicate that experienced money managers at the big funds are remaining cautious and sticking with well-known large-cap stocks, because the faster-moving, small-cap stock Nasdaq Composite Index ended the first quarter up 19%.

Most of the top-performing funds rode technology and financial stocks for gains last quarter. Those sectors advanced 19.7% and 19.3%, respectively.

Of course, some fund managers earned their keep much better than others.

Certainly, Bruce Berkowitz, manager of the $8 billion Fairholme Fund (FAIRX) is one, because, after losing 32% in 2011, his fund is up 29% this year.

And he showed some real chutzpah. Berkowitz was helped by troubled retailer Sears (SHLD), which is up 120% this year (and is 10.7% of the portfolio), and equally out-of-favor Bank of America (BAC), up 72% this year and the best performer in the Dow Jones Industrial Average. Bank of America tumbled 58% last year.

The next-best performer to Fairholme among the big funds was the $2.5 billion Touchstone Sands Capital Select Growth Fund (CFSIX), with a gain of 23.9%, achieved with the help of technology stocks, which make up 33% of the fund. It benefited, in particular, from what appears to be everybody's favorite pick, iPhone and iPad maker Apple (AAPL), which makes up 7.5% of the diversified fund.

The $4 billion Columbia Seligman Communications & Information Fund (SCMIX) is true to its name, as its portfolio is 92% technology stocks, which helped it to a 22.5% gain in the first quarter. One of its biggest winners was chip maker Advanced Micro Devices (AMD).

Continuing with the technology theme, the $3.2 billion T. Rowe Price Science & Technology Fund (PRSCX), up 21.7% this year, is benefiting from the growth of computer-aided design software maker Autodesk (ADSK). The $4 billion Putnam Voyager (PVYYX) has advanced 21%, thanks, in part, to the 34% rise of chip maker Micron Technology (MU).

The $42 billion Fidelity Growth Company Fund ( FGRFX) is also up 21% this year, and achieved that with some real home-run picks in drugmaker Regeneron Pharmaceuticals (REGN), up 106% this year, and clothing accessories retailer Fossil (FOSL), up 68%.

Here are 10 stocks that have been among the biggest contributors to the performance of the top-performing large mutual funds this year, in inverse order of their returns:

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