Bay Area mutual funds lag the market, mostly. (Tampa Bay Area)(Industry Overview)

Equity mutual funds based in the Bay Area turned in a mixed performance in 1996, with few outscoring the stock market and others failing to measure up to their peers.

That kind of uneven result is not uncommon in an industry where most players routinely underperform. According to one observer, it might even be helpful to investors by smoothing out some of the market's bumpiness over time, since a strong fund one year often turns into a dud later, and vice versa.

Bucking a trend in the markets during the year, one of the strongest performances among Bay Area funds was turned in by a small-capitalization fund.

Heritage Funds, a subsidiary of St. Petersburg-based Raymond James Financial Inc., posted its best numbers with its Small-Cap Stock Fund, which gained 27.5 percent.

That increase …