New Funds Free Of Bearish Baggage Unger Has Hilton, KLM Rookies outperformed in 2000-01 bear market and again so far this year.(MUTUAL FUNDS)

Byline: PAUL KATZEFF

For about a month the market has drifted down like a blimp with a slow leak. One group of funds outperforming the market consists of portfolios that have opened to the public since March 10, 2000. That was the last day of the prior bull market.

Since then, new diversified U.S. stock funds gained 6.2% on average through April 12, according to Morningstar Inc. In contrast, the S&P 500 index lost 9.2%.

This year, new funds were up 1.2% vs. a 2.9% loss for the benchmark.

This trend shows you one of the better places to look for a diversified stock fund. Also, stock picks of these funds offer clues about where you can look for new emerging stock leaders.

One reason the new funds are outperforming has to do with cap size. Of the 26 funds with the best average annual returns since March 10, 2000, 20 were small caps.

And small-cap value and core funds were the top performing U.S. diversified stock-fund categories for the year and the past month through Thursday, according to Lipper Inc. Small-cap value in particular gained nearly 11% for the year vs. a 2.5% loss for stock funds overall.