Recent gyrations in the US market have had fund performance in something of a spin. With market volatility on the rise, that most desirable attribute, consistency of performance, has been even more elusive for fund managers. Add to this the turmoil in investment flows, and the manager's lot has not necessarily been a happy one, even when the S&P500 Index rose by 28.87% between 9th January and 17 July this year. Most of the smiles raised by this run-up were quickly erased when the market crashed back 19.13% between 17 July and 31 August.

Few US equity funds managed to maintain much positive consistency. Factoring in the performance between 5 December 1997 and 9 January 1998 when the S&P500 lurched down 5.57%, only eight funds managed to obtain top quartile rankings in all three of these key periods, led by the trio of Weitz funds (see below) that target medium and smaller-sized companies within concentrated portfolios. In stark contrast, 94 US equity funds (mostly targeting small caps) floundered in the bottom quartile in each of these periods, again proving the fact that its much easier to be consistently below par than above.

Many funds managed to show a considerable turnaround in their performanc-es, both good and bad. Some 330 of the bull period underachievers became overachievers in the bear period, led by a selection of bear funds (funds which seek to in-vert the index with derivatives and short-selling), some genuine contrarian funds and a sprinkling of property funds.

Surprisingly, fewer funds actually saw the re-verse. Less than 150 funds switch-ed from first quartile to fourth. The biggest bull winners were also the biggest bear los-ers. The table of turnaround leaders to laggards is dominated by aggressive funds using either high-risk derivatives strategies or a single sector approach.

The very largest funds did maintain reasonable consistency. Due to their oft un-wieldly size, most of the funds' have their largest stakes in the larger end of the market. Most saw either an upward or downward shift of just a single quartile, if any change at all. Janus Fund, dropping to third quartile, Income Fund of America and T Rowe Price Equity Income 'turning around' from fourth to first were the only exceptions.

Generally, consistency of performance has equated with consistency of ap-proach. Funds that focused on their core holdings, perhaps raising cash from 'side-bets' and using it to either cushion against the decline and/or increase their core holdings faired best. Funds that sought to instantly and completely reposition themselves found the going toughest. As the market continues to churn in the face of domestic and global factors, this is likely to remain the case.

David Masters is with Micropal in Boston