Demand became so frantic that for a few weeks last year, short-term Treasury bills had negative yields for the first time in their 79-year history. Among bond funds, the Vanguard Long-Term Bond Fund (VBLTX) gained 8.6%.

Nonetheless, the State Farm Growth Fund (STFGX) produced a loss of 28% for all of 2008, which easily beat the S&P 500. Not losing in 2008 meant not losing as much as others.

Placing second in our 2008 rankings was Northern Trust Investments, which moved all the way up from 64th place a year ago. "We got the sector calls right," says Steve Potter, president of Northern Trust Global Investment. The fund family underweighted hard-hit energy and financial stocks. Still, the Northern Small Cap Value Fund (NOSGX) ended with a loss of 23.43%

State Street, (STT) which didn't have a broad enough product line to qualify for ranking in 2007, debuted in third place, followed by MFS and Waddell & Reed Financial (WDR) -- the top finisher in 2007.

"It's a bittersweet recognition," says Mike Avery, chief investment officer at Waddell and Ivy Investment Management, which placed ninth. "People don't pay us to lose money," he says. Waddell funds are sold exclusively by the in-house sales team; the Ivy Funds, which are nearly identical to those in the Waddell & Reed lineup, are sold via third parties. The flagship Waddell & Reed Advisors Asset Strategy Fund (WBASX) dropped 26% last year. "We'll continue to be defensive," says Avery, whose Waddell family ranks first for five-year performance. "We expect equity markets to be in a narrow trading range and will manage accordingly," he says, meaning "nimble, flexible stock-picking, because sectors and industries won't bail you out."

Rounding out the top 10 were Barclays Global Fund Advisors, Vanguard Group, RidgeWorth Funds, Ivy and HighMark Capital Management. Vanguard, one of the three biggest fund families in the country, managed a top 10 showing even though its one-time flagship Windsor Fund (VWNDX) was off a dismal 41% last year.

American Funds and Fidelity are the two other largest funds. American improved on its 20th-place performance in 2007, ending 2008 at 12. But Fidelity dropped to the bottom half of the list -- 39th from 15th a year ago -- as its former flagship, Magellan (FMAGX), fell 49% after making some disastrous bets on financials.

Columbia Management, the investment division of Bank of America (BAC), had a so-so performance, finishing at 28, while Van Kampen Asset Management, a Morgan Stanley (MS) unit, ended at 17.