Despite a subpar 1996, AIM hasn't lost its touch.

So says Scott Lucas, chief equity officer for the closely held Houston mutual fund giant, which manages about $70 billion, including $48 billion in stock funds. AIM announced plans in November to merge with British money manager

Invesco

(IVC) - Get Invacare Corporation Report

gained 335% between 1990 and 1995 and ranked in the top 1% of all mutual funds. But in 1996, the fund rose just 14.3%, finishing 2,502th of more than 3,900 funds tracked by

Lipper Analytical Services

.

Then there's AIM's $10 billion

Value

fund

(AVLFX)

. It rose 176% between 1990 and 1995, ranking in the top 10% of all equity funds, but last year it gained just 14.5% and ranked in the bottom half.

"We are not going to win all the time," Lucas admits. "But if you look back at our record, our goal is to win over time."

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To do that, AIM will stick to what it does best, combining outside analysts' earnings estimates with its own fundamental research to find companies with the fastest-growing earnings, Lucas says.

"We let Wall Street build models

of how much publicly traded companies will earn, because we figure Wall Street builds models better than anybody else," he says. "We use them to understand where the perception is out there, and then we spend most of the time looking for data points outside of them."

Ideally, AIM will find "some sort of catalyst inside a company that nobody else has seen," he says.

Lucas says AIM will shift its assets among industry groups, looking for sectors with rising earnings and the potential for positive surprises. But he says the fund company remains bullish on technology stocks despite their sharp run-up so far in the 1990s.

"You've got to love technology, because this is the technology decade," he says. "We can see what's happening -- the whole world is changing ¿

and if that's the case, this is going to be a continually exploding thing."

Lucas says investors probably won't see much change from AIM's merger with Invesco, since the two companies will keep their investment operations separate. But he's bullish on the new company's prospects.

Only about 30 investment management companies worldwide will prosper, Lucas says. They will need strong load funds, no-load funds, a presence in corporate and 401(k) markets, shareholder services and research departments. The merger gives Amvesco a presence in all five (AIM funds carry a load, or sales charge, and Invesco's do not) and leaves the company large enough to stand on its own, he says.

"I think there will be 15 mutual fund companies that survive, and I think there will be a like number of broker-dealers that grow at the same pace," Lucas says. "If you're not set up to play soon in the broader areas of money management, you're going to be left at the post."

Investors, who have pushed Invesco's American depositary receipts from 38 when the deal was announced to 52 Wednesday, seem to agree that the merged company, which will be the world's 12th-largest fund family, has ensured itself a good position in the oncoming mutual fund demolition derby.

Now AIM just has to deliver the same for its fund shareholders.

By Alex Berenson

aberenson@thestreet.com