MUTUAL FUNDS. The steady returns of old funds...

DOES what goes up have to come down? Not always, boast an exclusive group of eight mutual funds. The managers of all these funds have consistently beaten the market in every ten-year period for the last 30 years. They are eight of the 85 oldest existing common stock funds in the United States, and although often overshadowed each quarter by newer funds that quickly rise to the top, they demonstrate a long-term consistency and reliability that makes them ``a lot more rewarding,'' says Graham Holloway, president of American Funds distributors, which markets three of the eight funds.

The eight common stock funds that outperformed the market for 30 years, based on 1986 figures by Lipper Analytical Services and Wiesenberger Investment Services, are: American Mutual Fund, up 477.52 percent for the latest 10-year period; The Investment Company of America, up 469.27 percent; and Washington Mutual Investors Fund, up 460.98 percent. These three are all part of the American Funds Group.

The other five are: Fidelity Fund, up 414.90 percent; Guardian Mutual Fund, a 462.66 percent gain; Over-the-Counter Securities Fund, up 670.62 percent; Pioneer Fund, up 346.16 percent; and Templeton Growth Fund, up 514.96 percent.

(A ten-year performance record covers a variety of market conditions and eliminates special short-run circumstances favoring particular types of investments.)

What has allowed these funds to so consistently make money for their shareholders when the market is rising, and then protect that money when it declines?

``I suspect the key to their success is simply stable management, a steady income that's easily invested, and growth that's not incredible,'' says Art McPherson, of Colonial Management Associates in Boston.

Others agree that long-term success usually follows from a fairly conservative approach. Meanwhile, in the short-term and even for a period of several years, these funds could have been out of phase with the market, says John Carey, who manages the Pioneer Fund.

With this kind of conservative management, ``what you see is what you get,'' observes Donald Rugg, president of Charlesworth & Rugg, a money management services firm in Woodland Hills, California. You know exactly what you're getting into, and what to expect, he says.

Being around so long has made these funds reassuring to investors, who won't be swayed by one boom year, thus avoiding the ``trap of cumulative performance,'' says Michael D. Hirsch, vice president of the Republic National Bank of New York.

Because the environment has become so competetive, says Gerald Perritt, editor of The Mutual Fund Letter in Chicago, ``fellows coming out with a single fund probably don't stand a chance of sticking in the long-run.'' Most of the funds that do succeed are part of a bigger family, he says.

Each of the eight ``winners'' concentrates in stocks of solid high-quality companies, maintains a diverse portfolio of equities, and has been under the same management for many years. They also conduct almost all of their own research.

The unique way in which each is run, however, makes it hard to find a single, successful investment pattern.

Pioneer's manager John Carey says his fund places a great deal of emphasis on meeting the management of a company before investing in it. He looks for management that displays continuity and a vested interest in the company's success - such as owning a meaningful amount of stock in the company.

Obviously, he says, ``a terrific product that's badly managed will lead to bankruptcy.'' And his fund doesn't place very much emphasis on stock price to avoid fads and stocks with higher multiples.

The American Funds Group has achieved stability for its three winning funds by managing them under a system of using multiple portfolio counselors, as described by Mr. Holloway, marketing head of the American Funds Group. Each fund is broken into totally autonomous parts, which are managed by different individuals as if each section was a separate fund.

Although the fund as a whole will never do as well as the best section under this system, it will also never do as poorly as the worst section, Holloway says. It also makes the fund appealing to investors who want more stability, and don't want to ride an investment roller-coaster, he adds.

The Over-the-Counter Securities Fund is the smallest of the eight, with only $300 million in assets. But portfolio manager Binkley Shorts attributes its size to the fact that it carries a load. ``Load funds are not very attractive right now,'' he says.

Mr. Shorts invests in a large number of ``obscure'' companies. Small and relatively new, they are the least sought after in today's liquidity-driven market, Shorts says.

But ``you've got to stay out of the mainstream to beat the market,'' he reasons. And because obscure companies are thinly traded, it takes longer to accumulate a position in one of these companies. Once you do, he says, you stick with it.

The Templeton Growth Fund invests a great deal of its $1.4 billion in international stocks. Only 23 percent of this Toronto-based fund's assets are currently in US securities.

``Right now, we have a lot of West European stock, and a lot of focus in Australia,'' says Mauro Vescera, fund representative. However, the fund is careful to avoid markets tied to political turmoil, like South Africa.

Manager John Templeton's philosophy has remained the same in the 40 years he's been running Templeton Growth Fund: ``When you are looking for bargains, you don't limit yourself in any way,'' says Templeton marketing representative Susan Keuper.

Funds that look across the investment spectrum and diversify their risks internationally tend to be the safest, agrees Reg Green, editor of Mutual Funds News Service in San Francisco. As a fund grows, adds Mr. McPherson of Colonial Management, it may need to expand its investment into some international markets.

Templeton looks in every country, industry, and business to find the best bargains, hold them for five to seven years, and then sells them, buying other bargains. So far, this philosophy has yielded an average yearly growth of 24.9 percent over the last 15 years.

On the other hand, no international stocks are held by managers of the Guardian Mutual Fund, who say it's too risky with the state of international currency, a shareholder representative says. But this fund has found enough diversity in the US market for its under $600 million in assets.

Can these funds continue to grow and beat the market?

That depends on the rate of growth today, say some investment officers. A fund that nearly doubles in size each year will find its future performance limited. ``There are funds that were gangbusters for a long time, but aren't anymore,'' notes Mr. McPherson of Colonial.