The Wells Fargo Advantage C&B Large Cap Value Fund, one of the top-performing U.S. mutual funds of the past decade, may trail the Standard & Poor's 500-stock index for the first time since 1999, in part, the fund says, because it avoids the volatile energy sector when picking its long-term holdings.

The $516 million fund, run by a team led by Kermit S. Eck, has risen 0.7 percent in 2005, lagging behind the S&P 500's 5.3 percent gain, including reinvested dividends. The managers have limited investments in oil stocks while guiding the fund to an average annual advance of 12 percent during the past decade, outpacing the index's 9.4 percent return.

"We're not generally attracted" to the energy sector, Eck, 53, said in an interview. "We like good businesses that have competitive advantages that aren't dependent on commodity prices."

About 5 percent of the fund's assets are in energy stocks, compared with the group's 9.2 percent weighting in the S&P 500. The S&P Energy Index jumped 28 percent this year, the biggest gain among the index's 10 industry groups.

Eck, a partner at Philadelphia-based Cooke & Bieler LP, manages the fund for Wells Fargo & Co. with six colleagues. They focus on companies with low stock prices relative to earnings growth. Wells Fargo, the fifth-biggest U.S. bank, has 120 mutual funds and employs 16 external money-management companies, including Cooke & Bieler, to oversee them.

Cooke & Bieler, which has run the fund since 1990, linked up with Wells Fargo in July 2004, with the San Francisco-based bank handling marketing and sales. The fund's assets have increased about threefold since then, Eck said.

The fund's biggest investment is Armonk, N.Y.-based MBIA Inc., the world's No. 1 bond insurer, making up about 2.4 percent of assets. McDonald's Corp., the world's largest restaurant chain; Zale Corp., the biggest U.S. jewelry retailer; and Warren Buffett's Berkshire Hathaway Inc. are other top holdings.

"We are long term in sort of a short-term world," said Eck, who tends to hold stocks for three to five years, compared with an industry average closer to one year. The fund has owned MBIA shares for 11 years. "We've always recognized that we are buying a piece of business rather than just a stock certificate that we're going to flip to the next guy."

The Wells Fargo fund advanced at an average annual rate of 8.8 percent in the past five years, ranking third of 66 competing large-company value funds, according to data compiled by Bloomberg. Target Large Cap Value Portfolio and Merrill Lynch Large Cap Value rose 9.9 percent and 9.8 percent, respectively.

Eck graduated from Montana State University, with a degree in computer science. He started at Cooke & Bieler as a summer intern in 1979 and joined the firm full time after earning a master's degree in business administration from Stanford University. He left Cooke & Bieler in 1984 to work for computer and buyout companies, and returned in 1992.

Eck limits his energy holdings because of concern about rapid gains and declines in the oil markets. Crude oil prices jumped 66 percent this year and rose to a record after Hurricane Katrina struck the Gulf Coast in August.

Third-quarter earnings at the industry's six largest publicly traded companies rose 52 percent. Profit at Exxon Mobil Corp. soared 75 percent to an industry high of $9.92 billion. The Irving, Tex.-based company represents about half of the fund's energy holdings.

"There is an awful lot of money out there that says, 'We don't really know if oil should be at $35 or $60 [a barrel], but the train is leaving the station, let's get on,' " Eck said. "We're sort of willing to go the other way."

And, said Geoff Bobroff, a fund industry consultant in East Greenwich, R.I., "energy has lost some of its luster as oil prices declined over the past few weeks, and the fund has come back."

Some of Eck's top holdings have struggled this year. Shares of MBIA slipped 1.7 percent. MBIA is among companies being investigated by New York Attorney General Eliot L. Spitzer and the U.S Securities and Exchange Commission for possible improper accounting.

MBIA this month restated seven years of earnings and reported lower third-quarter profit as it set aside $75 million to prepare for a settlement. The stock is up 14 percent since Oct. 12. It closed Friday at $63.03 a share.

"They've sort of got the regulatory issues behind them," Eck said. "You have to go back and ask: Is this a good business? We think it is."

The Wells Fargo fund owned shares of Boston-based State Street Corp., the biggest provider of investment services to institutions, in the early 1990s and sold the stake about five years ago when it became too expensive, Eck said. He bought shares earlier this year. The stock fell 16 percent in the 12 months ended March 31 "to where it made reasonable sense," Eck said.

From mid-April through Oct. 31, the stock gained 36 percent as State Street reduced costs, and revenue from money management and non-U.S. clients climbed. Eck sold most of his stake by late October, as State Street's price-to-earnings multiple, now about 21, exceeded that of the S&P 500. The stock ended the week at $57.90 a share.

"It's still a good business," Eck said. "I'm just not sure it's that good."