Whatever happened to the mutual funds that used to be called “high-growth”? Some of them are off by 40 percent or more, shocking investors to the core.

Investors tend to think of funds as stodgy but relatively safe. You go by the name (“ah, a utilities fund”). Or maybe an ad (“mmm, five stars from Morningstar”). Or a magazine cover (“oooh, a top manager for 2001”).

Few people bother to look at what a fund actually owns.

Oddly, funds are often treated as a special investment class.

Investors will say, “I have stocks, bonds and mutual funds.” But mutual funds are stocks and bonds baskets of them, in various mixes.

How well a fund does depends on which securities it buys. The fund may or may not be diversified. It may or may not behave in the way its name implies.

Take utilities funds. To most investors, “utilities” means “conservative.” They think of regulated companies, paying dividends and delivering heat and light.

But please wake up and smell the steam. Utilities can be Wild West, with performance stretching from near-bankruptcy in California to go-go growth in natural gas and wholesale power generation.

In other words, you can’t be just a utilities investor. You have to know which kinds of utilities a fund manager buys and form an opinion about them. That means industry research.

Two funds tell the story. The new Gabelli Utilities fund buys gas and electric companies that it thinks are takeover targets. Last year, its price jumped 16.4 percent.

At the same time, Fidelity Utilities lost 20.5 percent. Its manager gambled on telecommunications stocks, which had a rotten year.

To know the difference, you had to watch what the fund was buying, read the manager’s reports and research the risks things fund investors normally don’t do.

And how about balanced funds that hold both stocks and bonds? You think of them as diversified, but Fifth Third Balanced Fund is 44 percent in technology stocks.

In the “equity income” group, people aren’t seeing a lot of income, largely because fewer stocks pay decent dividends. Chase Vista Equity Income Fund currently yields a big, round 0.00 percent, with its 1.8 percent dividend all but swallowed by expenses.

Gains from the bubble

Then there are “aggressive growth” funds like Janus Twenty, steeped in high-tech. You thought it was super stock-picking that gave Janus such a boost in early 1999. Instead, it was mostly the tech bubble passing through. Since then, Janus has more than given up its extra gains.

The fund industry also pitches a swarm of new offerings every year. You’d think that the 4,400 stock funds we already have would be choice enough.

But another 912 registered in 2000, FundFiling.com reports. The newcomers reflect what the industry thinks it can sell. That means funds run by last year’s luckiest managers (because they show good records); funds built around airy concepts such as “global leaders;” and narrow industry niches that sound fresh. For example, among Fidelity’s Focus funds, sold by financial advisers, there’s one for “electronic components” and one for “developing communications.”

In recent years, investors have spread their money over various classes of stock, such as value and growth. I could fill a page with them. We’ve got mid-cap value, microcap, big-cap growth, small-global-value, blah blah blah. My personal favorite is something called “all-cap growth and value,” which could cover any stock at all.

I doubt that these fine distinctions do much for individual investors, except confuse them. What’s more, the leading groups inevitably fall back and laggards catch up.

True diversification

The formerly sizzling Barra growth-stock index dropped 14.1 percent in the past 12 months while the formerly plodding value-stock index gained 14.2 percent. Value-fund managers didn’t suddenly go from dumb to smart. They were just sitting in the road when the market turned their way.

Note that not all diversified funds are well diversified. You’ll find the range of stocks the fund holds in the manager’s latest report.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C. 20071-9200.