Stock Mutual Fund Owners See Gold Lining in Inflation : Investments: Funds heavy in that commodity surge 21.7% for the quarter, compared to 3.3% for general stock funds.

In a disturbing throwback to the 1970s, stock mutual fund owners who bet on inflation’s return reaped the biggest rewards in the first quarter.

Funds that target gold mining stocks rocketed 21.7%, on average, the best performance of 23 fund categories tracked by Lipper Analytical Services in New York.

In contrast, the average general stock fund rose 3.3% for the quarter--much of which was given back in Friday’s market plunge.

Fear of inflation was the financial markets’ dominant theme in the latter part of the quarter, as prices of many key commodities shot up unexpectedly.

Gold stock funds anticipated that commodity surge by moving up sharply early in February, then continuing to climb in March. Gold is considered the classic hedge against inflation, which erodes the value of money.

Other inflation-sensitive stock fund categories also were big winners: Real estate funds jumped 15.1% for the quarter, on average, and natural resources funds, which specialize in energy stocks, advanced 13.4%.

For the typical stock fund owner, conservative stock funds produced far better returns than more speculative small-company stock funds--the reverse of what happened in 1992, when small-stock funds were the market’s stars.

The average small-stock fund posted a total return of 2.0% for the quarter, after jumping 12.6% for all of 1992.

In contrast, conservative “equity-income” funds, which usually own big-name stocks that pay hefty dividends, advanced 6.1% for the quarter after gaining 9.5% all of last year.

Smaller stocks were hurt most in the market selloff that began before President Clinton’s State of the Union speech in February, and many of those issues have been unable to rally back.

The shortfall in small-stock performance pulled the average stock fund’s gain down for the quarter to 3.3%, which was less than the Standard & Poor’s 500-index return of 4.4%. The S&P; is the most frequently used benchmark of stock performance.

Michael Lipper, president of Lipper Analytical, noted that while gold funds came alive in the quarter, they have been the worst funds to own for the last five years. As inflation declined in the early 1990s, investors abandoned gold in droves. In the five years ended March 31, the average gold fund actually declined 9.7% in value--while the average stock fund zoomed 92.9%.

If signs of rising inflation persist, however, experts concede that gold funds could continue to climb.

Another emerging leader among fund groups: international stock funds. In the first quarter, most foreign stock markets significantly outperformed the U.S. market. The decline of the dollar helped by boosting the value of foreign stocks when translated into dollars.

The average international stock fund gained 8.8% in the quarter after falling 5.1% for all of 1992. Japanese funds were standouts: They soared 17.2% for the quarter.

In other first-quarter trends, utility stock funds rose 8.0% on average, as declining market interest rates early in the quarter made utility dividends more enticing. Financial services funds jumped 12.2%, adding to last year’s 35.2% advance. Health care funds, among the worst-performing funds last year, tumbled an average 14.1% after losing 8.3% in 1992.