The last few months of 2011 entailed sovereign-debt issues in Europe, partisan gridlock and other tough scenarios, but the average equity fund still rose 8.73% in the fourth quarter, according to Lipper. Unfortunately, these funds ended the year down 6%.

“Despite a strong Q3 earnings reporting season, with 70% of the S&P 500 constituents reporting earnings above analyst expectations, investors remained rattled by the on-again/off-again resolutions of European authorities and the relatively high U.S. unemployment rate,” said Tom Roseen (left), head of research services for Lipper in Denver, in his latest performance report, released Wednesday.

Though equity funds ended 2011 with negative results for the full year, the Dow Jones Industrial Average was able to post a 5.53% return, Roseen notes, after a good fourth quarter. “However, with lowered government spending in the cards, corporations sitting on a pile of cash, continued accommodations by the Fed, and advances in technology, investors had a reason to cheer toward year-end,” he explained.

According to Lipper’s preliminary fund-flows data, equity mutual-fund investors were net redeemers last year, pulling out an estimated $74.0 billion from the conventional funds business (excluding ETFs). It’s worth noting, though, that with the flight to safety of the last six months of 2011, investors injected $128.6 billion into taxable fixed-income funds for the year, though they redeemed a net $17.4 billion from the muni-bond fund group and $145.3 billion from money-market funds.

The equity-funds universe suffered downside performance in seven of the last eight months of 2011, with only October posting a plus-side return (+11.32%), Roseen shares. In November, the average equity fund slumped 1.32% and then handed back 0.88% for December.

In the fourth quarter, 79 of Lipper’s 86 equity and mixed-equity fund classifications posted positive returns. U.S. diversified-equity funds rose 10.77%, sector-equity funds ticked up 7.44%, and mixed-asset funds improved +5.65%.

The notable laggards for the quarter included precious-metals funds, which declined 5.71% as gold lost 3.37% to end the quarter at $1,565.80 an ounce. Nonetheless, gold was still in positive territory for the one-year period, with a gain of 10.18% for 2011.

In the fourth quarter, the mixed-equity funds macro-group improved 5.65%; this group comprises primarily life-cycle or target-date and target-allocation funds. Over the past few years, this group was the largest attractor of investor assets in the equity universe, Lipper says.

Through Nov. 30, 2011, the macro-group gained $58.6 billion in assets, more than doubling the inflows of the world-equity funds group. Quarterly returns for mixed-equity funds ranged from 0.73% for absolute-return funds to 8.68% for mixed-asset target 2045. The macro-group, though, suffered a one-year decline of 1.34%.