Spying plenty of opportunity, fund investors are eager to get 2005 under way.

Along with

Merck's

(MRK) - Get Report

blowup and

Microsoft's

(MSFT) - Get Report

dividend, a steady economic recovery and a late-year tech rally were among 2004's signature events. Now, a survey of portfolio managers finds no ready agreement on what is shaping up to be 2005's big moment -- but also no shortage of fans for both big-cap and small-cap stocks.

"The textbooks would suggest that a declining dollar, increasing deficits and higher commodities prices would cause interest rates to spike," says Eric Barden, portfolio manager for the $45 million, small-cap

( TCVGX)Texas Capital Value and Growth fund, in taking a look at what happened in 2004. "But oddly enough, interest rates barely budged."

Barden believes that cheap, abundant capital favors smaller companies that have a harder time borrowing when rates rise. That's why he sees small- and mid-caps continuing their domination over large-caps, provided rates remain low. He intends to ride truckers like

Yellow Roadway

( YELL),

J.B. Hunt

(JBHT) - Get Report

and

Arkansas Best

(ABFS)

to profits next year, citing their ability to feed off small businesses and local economies.

Continued small-cap domination wouldn't surprise Barden, but it would definitely rattle a number of fund managers who are expecting large-caps to finally retake the lead in 2005.

"From 2000 through 2002, it made sense for large-caps to come down based on their overbought position during the bubble," says Dan Ahrens, portfolio manager for the $20 million

(VICEX) - Get Report

Vice fund, which specializes in sin stocks. "But that has long since burnt off, and it's time to revert to the mean."

Ahrens suggests investors forget the small guys in favor of mega-caps whose share prices barely budged in 2004. He likes

Anheuser-Busch

(BUD) - Get Report

and Microsoft, the latter of which stood still in part because of this month's mammoth $3-a-share dividend payout.

Jim Huguet, portfolio manager for the $123 million, large-cap

(IGAAX) - Get Report

TA Idex Great Companies-America fund, also won't be surprised to see blue-chip stocks heading higher in 2005.

"Energy stocks and real estate stole the thunder from the blue chips this year," says Huguet, who is looking for investors to return to high-quality names like

General Electric

(GE) - Get Report

.

If 2005 is to serve as a comeback year for the biggies, investors may have to steel themselves for more bombshells along the lines of those dropped by the likes of

Marsh & McLennan

(MMC) - Get Report

and

American International Group

(AIG) - Get Report

.

"Merck's drop came out of left field," says Robert Millen of the $2.7 billion, mega-cap

(JENSX) - Get Report

Jensen fund. "We owned the stock since 1992, and while we were concerned about the pipeline, we were comfortable until we heard about the Vioxx problem. Immediately after we heard about the problem, we sold our position over concerns about litigation."

Despite this setback, Millen hasn't thrown in the towel on Big Pharma. He is looking for Wall Street to finally give

Pfizer

(PFE) - Get Report

its due for spinning off tons of cash over the past five years.

Millen isn't alone. A number of fund managers, including Marty Koenig of the $13 million

( IHLAX) Integrity Health Sciences fund, are calling for the "oversold" sector to bounce back in 2005.

"It would not faze me to see drug stocks come back in 2005," says Koenig, who is bullish on generic drug giant

Teva Pharmaceuticals

(TEVA) - Get Report

and drug distributor

AmerisourceBergen

(ABC) - Get Report

. "They have no friends at all right now."

Meanwhile, on the economic front, Donald Quigley, portfolio manager for the $100 million

(BJBGX) - Get Report

Julius Baer Total Return Bond fund, says 2004's real surprise was not the dollar's downfall but the fact that it took so long.

"The dollar theoretically should have fallen apart sooner, because the current account deficit was as much of a problem in March as it is now," says Quigley. "And what a lot of people don't realize is that the dollar spent a lot of time correcting itself in 2004, only to move very little in the end. The dollar was around $1.26 per euro last January, and it's only 6% or so below that now."

The dollar and the euro may have had their ups and downs this year, but the dollar and the Chinese yuan spent another year joined at the hip. The Chinese currency has been pegged at 8.3 to the dollar for over a decade now, a state of affairs that continues to amaze Barbara Walchli, portfolio manager for the $17 million, mid-cap

( ROCAX)Aquila Rocky Mountain Equity fund.

It's a sentiment shared by Asha Joshi, portfolio manager for the $100 million, large-cap

( PYMRX)Payden Market Return fund. She won't flinch if she sees the Chinese revalue the yuan modestly in 2005. For her part, Walchli expects the U.S. to finally put some "real pressure on the Chinese for once."

But maybe the most pressure in 2005 will be felt outside of the currency arena -- in Yankee Stadium. As Neil Hennessy, fund manager for the $1 billion, small-cap

(HFCGX) - Get Report

Hennessy Cornerstone Growth fund, points out, "No doubt about it, the Red Sox winning the World Series was the biggest shocker of the year."