2001 Review: Big Funds Come Up Big

Big funds are often plodding performers, but they looked downright sleek in this tough year.

The book on giant funds is that their girth makes them slow-footed. After all, a 1% position in a $10 billion fund adds up to $100 million, and it takes days, rather than hours, to build or unwind positions that big. Imagine Dom DeLuise in a 40-yard dash and you get the picture!

Because of their size, huge funds typically spread their mountainous assets among a long list of stocks. That diversification typically earns them a "closet-index" tag as they rise and fall in modest cycles with the market. But that's not a bad thing in a year like this, when many more nimble funds' big bets on individual stocks and sectors led to big losses. ...