During the 1990s bull market, the prize for the most outstanding mutual fund might have gone to Vanguard 500 Index Fund ( VFINX), the granddaddy of all index funds. During the 10 years ending in 1999, Vanguard returned 18.07% annually and outperformed most actively managed funds, according to Morningstar.But in the difficult markets of recent times, S&P 500 index funds have sputtered. For the 10 years ending in September, Vanguard 500 returned 2.99%, a middling showing. For this decade, the prize for outstanding performance might go to a fund like CGM Focus Fund ( CGMFX), which returned 25.95% annually over the past 10 years. The difference between Vanguard 500 and CGM is stark. While S&P funds buy and hold the 500 large stocks of the benchmark index, CGM is flexible, wandering all over the map. Portfolio manager Kenneth Heebner takes whatever stocks seem likely to benefit from economic trends. He takes stocks of all sizes, sometimes betting on declines by selling short. In the erratic markets of this decade, CGM's ability to turn on a dime has provided an edge. When the S&P fell in 2000, Heebner shorted technology stocks and returned 53.9%. The next year, he bet on a recovery in housing stocks and outperformed the index by more than 50 percentage points. In 2007, Heebner returned 79.97% by buying mining companies and shorting financial stocks. While CGM may be winning plaudits lately, the fund received little praise in the 1990s. At the time, Heebner trailed the benchmark S&P 500, and many financial advisors sneered at the flexible fund's investing style. Advisors said that CGM drifted, buying small domestic stocks one month and large foreign issues the next. The advisors preferred what are called style-pure funds, which focus on one category, such as small value stocks.