In the second quarter, 80% of all mutual funds lagged the S&P 500 on average, yet miraculously, on June 30, 12 of the 13 Lipper mutual fund indexes outperformed that benchmark, and the 13th lagged it by just one basis point.

Magic? Or possibly portfolio pumping? That’s the question a CBSMarketWatch columnist asks, astounded that fund managers would resort to such illegal tactics on the heels of the fund trading scandal and Eliot Spitzer’s wrath over the past 10 months. By portfolio pumping, also known as marking the close, portfolio managers drive up the value of their holdings by making big purchases of the shares, typically on the last day of the quarter. And by propelling the performance of the fund, which is quoted from the last trading day of each quarter, funds can attract new assets.

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