Biotechnology continues to be the rage in stock mutual funds. It has provided added muscle to an investment year in which a great many portfolio managers have beaten the market averages.

The average stock mutual fund rose nearly 25 percent in the first three quarters of this year. That compares with a 17 percent gain for the Dow Jones industrial average, 20 percent for the Standard & Poor's 500."Health, financial services and small companies have been hot this year, with over-the-counter stocks leading the way," said A. Michael Lipper, president of Lipper Analytical Services, which tracks the nation's stock mutual funds. "Whether it all continues at this pace depends not only on the success of individual companies, but whether there's further recession or a double-dip recession."

Oppenheimer Global Biotechnology Fund skyrocketed 92.01 percent in the first three quarters of 1991 to lead the pack, aided by a gain of more than 160 percent in the stock price of Amgen. Chiron Corp. was also impressive.

"My guess is that this is only the beginning, folks, and, even if there's a 10 (percent) to 40 percent correction along the way, biotechnology stocks will have much higher prices three years from now," said Ken Oberman, portfolio manager for Oppenheimer Global Biotechnology. "We still know so little about how living creatures operate, so a 50- to 100-year research program is ahead."

Thinking small by holding "no-name" firms such as Thorn Apple Valley and Countrywide Credit helped the Montgomery Small Capitalization Fund to a 74.28 percent gain and second place.

"I focus on companies not well-known on Wall Street, and, even if the overall stock market is static from here on, I project a 24 percent annual earnings growth rate for the 75 stocks in my portfolio," said a confident Stuart Roberts, portfolio manager for Montgomery Small Capitalization.

Admittedly risky equities such as American Biogenetics, American Business Computers and American Film Technology fueled the 72.22 percent rise of the American Heritage Fund. To add stability, larger firms such as AT&T, Kroger, Eastman Kodak and Citicorp are also in its portfolio.

"I'm confident about the stock market, for the economy bottomed in the second quarter and I expect at least two more cuts in the discount rate that should lead a revolt of investors from money market instruments into the market," said Heiko Thieme, portfolio manager of American Heritage.

Meanwhile, second-tier biotechnology equities such as Immune Response, Applied Immune Sciences and Synergen have been strong performers for Fidelity Select Biotechnology Portfolio, up 65.92 percent.

Everyone, it seems is looking for the next Amgen.

"To a large extent, the biotechnology stocks have followed the lead of Amgen, whose sales of its Epogen drug continue strong and whose new Neupogen drug is also doing well," said Michael Gordon, portfolio manager for Fidelity Select Biotechnology. "It's unrealistic to think that these stocks won't have a correction, but firms such as Amgen do continue to perform well."

Top-performing stock mutual funds through the first three quarters of 1991, according to Lipper, were:

Oppenheimer Global Biotechnology Fund, New York, $120 million in assets, 5.75 percent "load" (initial sales charge), closed to new investors, $1,000 minimum initial investment, up 92.01 percent.

Montgomery Small Capitalization Fund, San Francisco, $44 million assets, no load, $5,000 minimum, up 74.28 percent.

American Heritage Fund, New York, $3.5 million assets, no load, $5,000 minimum, up 72.22 percent.

Financial Strategic Financial Services Portfolio, Denver, $71 million assets, no load, $250 minimum, up 67.06 percent.

Prudent Speculator Leveraged Fund, Los Angeles, $16 million assets, no load, $1,000 minimum, up 66.22 percent.

Fidelity Select Biotechnology Portfolio, Boston, $800 million assets, 3 percent load, $1,000 minimum, up 65.92 percent.

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Oberweis Emerging Growth Fund, Aurora, Ill., $17 million assets, 4 percent load, $5,000 minimum, up 63.83 percent.

Berger 100 Fund, Denver, $77 million assets, no load, $250 minimum, up 62.01 percent.

Financial Strategic Health Portfolio, Denver, $570 million, no load, $250 minimum, up 59.11 percent.

John Hancock Special Equities, Boston, $16 million assets, 4.5 percent load, $1,000 minimum, up 58.84 percent.

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