At the midyear mark, even some of the best-performing mutual funds of 2009 are still working on comebacks from dismal losses last year, underscoring lingering uncertainty in markets and in the funds industry.

Equity funds that invest in China and Latin America boast some of the biggest gains this year, according to fund-tracker Lipper Inc, a Thomson Reuters company, as well as some high-yield bond funds. Big losers include financial services sector funds and bond funds that invest in U.S. treasuries.

Yet many of top funds are only making up for losses suffered in the brutal bear market of 2008.

A top equity performer, Dreyfus Emerging Asia Fund, was up 84.3 percent through the end of June, swinging from a decline of 61.4 percent in 2008.

Also, the best mid-cap growth fund for the first half of 2009 was one from the RiverSource unit of Ameriprise Financial Inc, RiverSource Mid Cap Growth Fund, up 31.4 percent for the first half of the year -- compared with a decline of 44.7 percent last year.

Among large-cap growth funds, the best was Van Kampen's Equity Growth fund, up 34.4 percent through midyear -- after a decline of 50.7 percent last year.

What we have here was a reaction like the pendulum swinging the other way, said Lipper research manager Jeff Tjornehoj. That doesn't mean that the gains will continue, he cautioned.

The market built a little momentum and wham bam, you had a terrific year to date in 2009, he said. But he added, it's not like this is how the rest of the year will go. A positive scenario would be for the market to hold on to its gains and not repeat last year's volatility.

The context for equities is that the Standard & Poor's 500 Index lost 38.5 percent last year, its third-worst year ever, and equity funds lost even more, down 38.8 percent.

SIDEWAYS FOR THE SUMMER

Tjornehoj said he doesn't expect dramatic gains or losses for markets or for many funds for the next few months, and that only toward the end of the year will it become clear just how strong the recovery will become.

I expect things to be sideways for the summer, and in the fourth quarter we may get more clarity on the direction of markets and the economy, he said.

Plenty of funds that lost money last year have continued the trend with their big holdings in sectors like real estate and banking still struggling.

The worst-performing equity fund in the first half of the year was ProFunds' Real Estate UltraSector ProFund, down 26.84 percent, after falling 65.35 percent in 2008.

Another, Invesco's PowerShares Dynamic Financials Sector Portfolio fund, was down 28.8 percent through June 30, after falling 12.7 percent last year.

Among U.S. equities, mid-cap growth funds did best, rising 13.6 percent for the year so far on enthusiasm for mid-sized companies' ability to contain costs and improve revenue.

The manager who topped the category, John Schonberg of RiverSource Mid Cap Growth Fund, credited the performance to his decision to buy and hold stocks he believed had value even as their prices were falling.

I would say in the depths of despair last year, it was easier to pick good companies that were being sold indiscriminately, Schonberg said.

BOND FUNDS

Several of those with swift rebounds this year include Web hosting firm Akamai Technologies Inc and communications equipment maker PMC-Sierra Inc.

Schonberg calls himself more optimistic than most about the economy's outlook, noting there's a lot of cash waiting for signs of a rebound.

We're in a situation where things are OK and if they start to improve, profit margins are going to explode because companies are still prepared for the worst, he said.

Among bond funds, meanwhile, first-half top performance honors goes to an unlikely candidate: Eaton Vance's Floating Rate Advantage Fund, which invests in the secured debt of companies and was up 42.1 percent in the first half.

Traditionally such funds expect to earn around 2 percent a year. Last year was tough for a predecessor version of the fund, down about 40 percent, as investors in bank loans came to expect a rapid rise in defaults.

But that hasn't happened, and in many bankruptcies the fund has recovered all its stake, said manager Craig Russ. For example, Russ said the firm just got back nearly all the $8.2 million invested in General Motors following its bankruptcy.

Still, Russ said he doesn't expect the economy to recover much before next year.

We're in a high-default rate environment and we'll be in it for a while, he said.

Among the asset classes tracked by Lipper, world equity funds have done best for the year, rising 15.6 percent through June after falling 45.8 percent last year.

Latin American funds rose the most, 45.8 percent versus a decline of 57.3 percent last year, while funds investing in Asian countries aside from Japan rose 35.8 percent, compared with a loss of 49.8 percent last year.

The funds swung so dramatically, Tjornehoj said, because last year people felt that without an export-led recovery in Asia those countries economies would fall; now signs the U.S. economy will resume growth this year has led to what he called a relief rally in Asian stocks. But ultimately that sort of volatility can only discourage investors from coming back into markets, he said.

If you don't know if you'll be up 70 percent or down 70 percent that's a crazy market to be in, it's unlikely people will participate in a market that is that frenetic, he said.

China Investment