The Daily Screen: The Best Tech Funds

It's been a tough year for tech funds, except those that have ridden the new New Tech stocks.

Just a few years ago, it was so simple. Most tech funds bet big on companies that were in or around the PC biz like Microsoft (MSFT), Intel (INTC) and Dell (DELL) -- three of tech's vaunted four horsemen, with the fourth being networking titan Cisco Systems (CSCO).

Tech Dynasty Despite recent weakness, tech funds are the superstars of the past 10 years
	Avg. Tech Fund	S&P 500
YTD Return	-11.7%	-7.1%
1-Year Return	39.8	5.2
5-Year Return	29.2	20.8
10-Year Return	31.3	18.9
Source: Morningstar. Annualized performance figures through Oct. 26.

But times and investors' tastes have changed. Those PC and PC-related shops are looking like slow-growing blue chips, earning the Old Tech tag from money managers. And in the tech world there's nothing good about being called old. Now the pros are more excited by faster-growing tech shops that depend on the Internet -- network builders like Cisco or JDS Uniphase (JDSU) or software concerns like Oracle (ORCL) or server companies like Sun Microsystems (SUNW).

This much-ballyhooed shift hasn't been pretty. Microsoft and Dell are each down more than 40% this year. The tech-laden Nasdaq Composite is still hovering in the neighborhood of a 20% loss and TheStreet.com Internet Index has lost more than half its value.

Still, tech funds have a fat long-term lead on other funds and the S&P 500, so avoiding the sector is, to say the least, a bold move. Most investors already have plenty of tech exposure -- the average growth fund has a tech weighting of more than 40% these days -- but if you still feel like you don't have enough tech exposure, we've singled out some funds you might consider.

We've sifted the category for those funds that beat their average peer over the last one- and three-year periods and listed the top 10, ranked by their one-year return. We've also built a combined portfolio of the 10 leading funds and created an intriguing cumulative top-10 holdings list that's noticeably light on the PC crowd.

Leading Tech Funds These funds have crushed the broader market in recent years
Fund	1-Year Return	3-Year Annualized
(DRGTX)Dresdner RCM Global Technology	89.1%	71.3%
(TVFQX)Firsthand Technology Value	76.4	52.4
(PBTCX)PBHG Technology and Communications	75.2	52.5
(PIVAX)Pimco Innovation	74.3	60.1
(BINVX)Berger Information Technology	72.4	58.8
(FTCHX)Invesco Technology	67.5	44.9
(ICTEX)Icon Information Technology	62.9	42.4
(KTCAX)Kemper Technology	53.7	41.9
(IFODX)MSDW Information	51.8	56
(OITAX)Orbitex Info-Tech	49.3	55.9
Avg. Tech fund	39.8	41.1
S&P 500	5.2	15
Source: Morningstar. Annualized performance figures through Oct. 26.

The fund that jumps out at you is no-load (TVFQX)Firsthand Technology Value, run by tech guru Kevin Landis. The fund's 48.8% five-year annualized return beats every fund under the sun and smokes the S&P 500 by more than 28 percentage points. The fund has kept the beat going, but a lingering question is whether Landis is spreading himself a bit thin. His firm now has six funds and he's got a hand in running all of them. Still, you can't knock his record.

Two funds with more aggressive styles than Landis that have solid track records too are no-load (PBTCX)PBHG Technology & Communications and the broker-sold (PIVAX)Pimco Innovation fund. Just about all of these funds focus primarily on big-caps, but if you're fishing for more small- and mid-cap exposure, your best bet might be (ICTEX)Icon Information Technology, which had only some 7% of its assets in large-cap stocks at the end of the second quarter.

When we look at the stocks that have driven these funds to the top, there's a clearly discernable Net-centric theme where each of these top picks either builds networks or helps them run more smoothly. Instead of software titan Microsoft, we find rival Oracle. These funds are, on average, making bigger bets on networkers JDS Uniphase and Corning (GLW) than "must own" rival Cisco Systems.

Reports like these might eventually help investors sort out the changing of the guard in tech land, or at least work as a decent barometer of the smart money's current sentiment.

Under the Hood The stocks with the biggest weighting in the combined portfolios of the 10 above funds
Stock	Weighting in Top- 10 Funds	Number of Top 10 Funds Owning the Stock
Oracle(ORCL)	2%	7
JDS Uniphase(JDSU)	1.9	8
Corning(GLW)	1.8	7
PMC Sierra(PMCS)	1.8	9
Cisco Systems(CSCO)	1.7	6
Ciena(CIEN)	1.7	8
Sun Microsystems(SUNW)	1.6	7
Applied Micro Circuits(AMCC)	1.5	6
Juniper Networks(JNPR)	1.5	8
Network Appliance(NTAP)	1.4	7
Source: Morningstar. Holdings as of most recent portfolio report.

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