Internet funds are surfacing everywhere. But if you're looking for one that's been a consistent winner (in Internet terms), The Munder NetNet Fund is hard to beat.
Since its August 1996 inception, this fund has provided its shareholders with stunning total returns. Had you been smart--or lucky--enough to get into the fund when it began and held on to those shares through December 31, 1999, your fund investment would have had an average annual load-adjusted total return of more than 90 percent.
Cyberspace isn't the same today as it was in the 1970s, when it first began taking hold. Dial back 30 years, and the Internet was basically an information/education cyberhub with government, university and military folks its primary users.
By the 1990s, though, all that had changed. Accessibility was no longer limited, and all it took to partake was a computer and a willingness to master a few keyboard strokes. By the end of 1999, cyberspace was going wireless.
Over time its uses have changed too. The Net has become a cyberplayground, where everyone from savvy teens to your 90-year-old Aunt Millie are welcome to play. And they do, whether it's auctioning off collectors' baseball caps, ordering groceries, researching appliances or trading stocks and so on.
With changes on the Internet happening at breakneck speed, Internet fund investors need to be reminded of a few things before making their first investment. One, change is a very real part of the Internet world--and any change invites both opportunity and risk.
"There's not really a technology risk here," says Paul Cook, who is part of the five-member team that manages The Munder NetNet Fund. "The technology works. The Internet works. Fundamentally, whether or not the Internet will survive is not one of the risk factors that we consider."
The risks Cook does consider are execution risks. For example, will a company be able to compete with--and defeat--its competition, or be able to manage in hypergrowth?
Then there's the issue of the market's infatuation with Internet-related stocks. "Because [Internet stocks] are story-driven, open-ended equations, your ability to put them in a box in regard to their price per share is a little bit difficult," Cook says.
Portfolio managers of The Munder NetNet Fund tackle these challenges by making it a point to get to know the underlying management of the companies in which they have interest. "They have to have a real working business and real revenue growth to scale," says Cook.
With about 102 stocks in the fund's portfolio at the end of December 1999, assets were invested primarily in commercial services, computer software, computer hardware, Internet content and Internet community/portal companies. Market caps represented are a blend of different-sized companies.
Finally, like all equity funds, The Munder NetNet Fund is best suited to long-term investors--those with time horizons of at least five years. "It's not something you should put the rent money in," says Cook. "Why not? Because there are going to be volatile swings with regard to how these companies are valued."
Dian Vujovich is a nationally syndicated mutual fund columnist and author of 101 Mutual Fund FAQs (Chandler House Press). For free educational mutual fund information, visit her Web site, http://www.diansfundfreebies.com.
At A Glance
Fund name: The Munder NetNet Fund (MNNAX)
Managed by: Munder Capital Management
Portfolio manager: A team of five
Total assets: $6.56 billion
Top holdings: Amazon.com, America Online, Cisco Systems, Infospace and Yahoo!
Average annual return: 90.1% (since its inception in August 1996)
Maximum load: 5.5%
Total expense ratio: 1.65% annually (including 12b-1 fees of 0.25%)
Minimum initial investment: $250
Management fee: 1.65%
Phone: (800) 438-5789