Just as lightning never strikes the same place twice, you might not expect to see top-performing investments continue to turn in market-beating results year after year. Even novice investors know that past performance doesn't guarantee good returns in the future. However, a good long-term track record can show you how great investors stand out from the crowd.

Setting the standard
Recently, I stumbled across a list of 10 stock mutual funds that was published a couple of years ago. Their common trait: None had a losing year between 1997 and 2006, having overcome losses in the overall stock market during 2000, 2001, and 2002.

Out of curiosity, I decided to check on how these funds had done during 2007 and 2008. Knowing that similar streaks among top fund managers -- most notably, Bill Miller's streak of 15 years of outperforming the S&P 500 -- had come to an end, I was particularly interested to see how these funds had navigated the difficult market environment over the past couple of years.

Going in, I expected to see a total reversal of fortune for most of these funds. I was in for a big surprise.

Consistent performance
As it turned out, several of the funds managed to turn in pretty good results, at least relative to the market. Here are a few:

Fund

2007 Return

2008 Return

2009 YTD Return

Manning & Napier Pro-Blend Conservative (EXDAX)

6.5%

(5%)

(2.9%)

Gabelli ABC Fund (GABCX)

7.1%

(2.6%)

0.1%

First Eagle Overseas (SGOVX)

8.4%

(21%)

(8.4%)

Permanent Portfolio (PRPFX)

12.4%

(8.4%)

(2.2%)

Principal SAM Flexible Income (SAUPX)

5.6%

(14.2%)

(3.7%)

Vanguard LifeStrategy Income (VASIX)

6.7%

(10.5%)

(3%)

Source: Morningstar. Return as of March 19.

Yes, all of the funds saw their streak of loss-free years come to an end. But given the 38% drop in the S&P 500 during 2008, even the double-digit losses that a few of these funds posted looked positively stellar in comparison to typical stock funds.

The secrets of steady performance
Looking closer at the funds, it quickly became apparent that they beat the bear markets simply by sticking with their winning strategies from previous years:

  • Both Principal and Vanguard used a similar fund-of-funds approach that limited stock exposure to 25%-30%. That a lid on potential gains during good years, but effectively preserved wealth more recently.
  • Napier & Manning combined corporate bonds from well-known issuers such as Disney (NYSE:DIS) and McDonald's (NYSE:MCD)s with small allocations to stocks including Google (NASDAQ:GOOG).
  • Gabelli used an arbitrage-based strategy that focuses on merger candidates, which currently include stocks such as Genentech (NYSE:DNA) and Rohm & Haas (NYSE:ROH).
  • The Permanent Portfolio invested in healthy amounts of gold and silver bullion, along with Treasury bonds.
  • First Eagle put together a good mix of strong foreign stocks that currently includes sanofi-aventis (NYSE:SNY).

In other words, having discovered what worked for them, each of these funds stuck to their guns and continued their success.

They can't all be winners
Of course, not all of the 10 original funds were so lucky. One dividend fund, for instance, got snared for a 32.5% loss in 2008, despite owning winners such as Wyeth (NYSE:WYE).

But on the whole, these results support the idea that smart money managers can consistently deliver good returns over time, in both good markets and bad. Although past performance won't always be a perfect indicator, it's a reasonable place to start your research. Apparently, lightning does strike the same place twice -- sometimes.

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Fool contributor Dan Caplinger's fund portfolio hasn't fared quite as well as these funds, but he's not giving up. He doesn't own shares of the companies mentioned in this article. Disney is a Motley Fool Inside Value recommendation and a Motley Fool Stock Advisor pick. Google is a Motley Fool Rule Breakers selection. Try any of our Foolish newsletter services free for 30 days. The Fool's disclosure policy survives good times and bad.