The Big Screen: What's in a Name When It Comes to Your Mutual Fund?

Imagine buying a pint of chocolate ice cream, only to find it filled with rich, creamy and totally unwanted vanilla when you get home.

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That's the kind of unwelcome surprise some fund investors could get when picking through the tech and growth fund bins. In the wake of the Nasdaq's collapse, there are tech funds out there that don't actually have much of their money in that sagging sector. At the same time, there are several sizable growth funds that still have nearly every penny riding on the tech sector. Today the Big Screen checks out a few funds in both camps to illustrate why it's always a good idea to look beyond a fund's name and into its portfolio to make sure the fund you're buying is the fund you want.

Though the situation is troubling, it's not shocking. Right or wrong, it's routine for fund charters to give fund managers more than a little leeway in what they can and cannot invest in. With the average tech fund having lost more than half its value over the past 12 months, according to Morningstar, it's not surprising that some tech managers have used that leeway to invest outside the tech realm.

At the same time, it's tech that propelled tech and tech-heavy growth funds to triple-digit gains in 1999, and many of the growth managers who rode that wave are still making big bets on the sector.

Tech, Big Growth and the Market

Source: Morningstar. Returns through April 10.

Fund companies don't typically go out of their way to give investors up-to-date portfolio information, so it's not that easy to sift through their ranks for tech-light tech funds or tech-stuffed growth funds. That said, we managed to find some using information from shareholder reports and fund company Web sites. Let's first look at tech funds with 60% or more of their money invested outside the tech sector.

Tech Lite These "tech" funds have fairly small tech weightings
	Tech Weighting	YTD Return	1-Year Return
(WWWGX)Kinetics Internet Global Growth	16.8%	-13.2%	-50.7%
(WWWIX)Kinetics Internet Infrastructure	17.9	-11.1	-54.8
(UNSCX)Waddell & Reed Advisor Science and Technology	34.2	-18.4	-36.4
(WSTCX)W&R Science and Technology	38.6	-18.8	-39.3
(AVSTX)Alleghany/Veredus SciTech	39.8	-18.6	N/A
(MNIAX)Munder International NetNet	40	-32.3	-66.4
Avg. Tech Fund	81.9	-34.2	-58.9
Source: Morningstar. Returns through April 10. Holdings as of most recent portfolio reports.

If there's any area where a tech-fund manager can stretch his or her stock menu, it's the Internet. That's because Net stocks aren't necessarily tech stocks because the definition is in the eye of the beholder, or in this case, the eye of the fund manager. The appellation can stretch from such vastly different concerns as networker Cisco to retailers Amazon.com and/or Wal-Mart and even to stodgy brokerage Merrill Lynch.

That explains why three of the four funds on our list of tech-light funds are Net funds. The two no-load Kinetics Net funds on our list both started at the end of 1999 and floundered in their first 12 months, but they've held up much better this year. That's because both look beyond the tech sector to broader telecom plays.

The same could be said for the broker-sold (MNIAX)Munder International NetNet fund, which invests about 75% of its money overseas and also broadens its focus to include telecom stocks.

This weights the side of the argument that Net funds don't necessarily deserve tech labels, but that begs the even tougher question: Where do they belong? Let's shelve that question for now and consider some funds that really sound like tech funds, but don't actually fish much in the tech pond.

The broker-sold (UNSCX)Waddell & Reed Advisor Science and Technology fund and its no-load sibling, the (WSTCX)W&R Science and Technology fund, both tend to have a significant appetite for health care stocks. That was the case when veteran tech manager Abel Garcia held the reins and it's also true with new manager Zachary Shafran, who took over the fund in February when Garcia jumped ship for AIM Funds.

The no-load (AVSTX)Alleghany/Veredus SciTech fund is a similar proposition so far in its youth. The fund launched at the end of June in the midst of the Nasdaq's collapse, and co-managers B. Anthony Weber and Charles McCurdy have been understandably reluctant to buy tech stocks. At the end of March, they had 62% of the fund's money in cash. With the rest of the fund's assets they've split their investments fairly evenly between tech and health care stocks, according to Morningstar.

Another young fund that made similar moves and barely missed our cut is the broker-sold (BGSAX)BlackRock Global Science & Technology fund, which rolled off the assembly line last May. The fund's co-managers, Jean Rosenbaum and Michael Carey, only had 53% of the fund's money in stocks at the end of January, according to Morningstar. With that modest stock portfolio, they had about 44% in tech stocks and some 35% in health care stocks.

Like most of these tech-light tech funds, this young buck has lost less money than its peers so far this year. This may sound good, but remember that it's tough to build a portfolio when the funds you own chart a different course than you expect. The upshot: When you buy a tech fund, you're signing up for the peaks and valleys of tech investing.

Just as these funds haven't fallen as hard as more pure tech funds recently, they probably won't bounce back as much whenever the sector recovers. For instance, over the last week the average tech fund has rung up a 20% gain, but the funds on our list are up just 6.8% over the last five trading days, on average.

Growth Funds That Are Really Tech Funds

Growth funds with outsize tech stakes tend to zig when their peers zag. Here are a few funds with at least $100 million in assets that had at least 75% of their money in tech stocks, according to portfolio reports that are at least as recent as the end of last year.

A Tech Fund by Any Other Name ... These "large-cap growth" funds look an awful lot like tech funds
	Tech Weighting	YTD Return	1-Year Return
Large-Cap Growth Funds
(BFOCX)Berkshire Focus	93.4%	-58.2%	-72%
(MDFOX)Merill Lynch Focus Twenty	83.3	-51	-62.2
Avg. Large-Cap Growth Fund	39	-19.6	-34
Mid-Cap Growth Funds
(VWPVX)Van Wagoner Post-Venture	92.4%	-58.5%	-70.6%
(VWEGX)Van Wagoner Emerging Growth	89.8	-57.6	-68.4
(POGSX)Pin Oak Aggressive Growth	84.8	-41.7	-60.8
(HAGWX)Harbor Growth	75.5	-34.8	-47
Avg. Mid-Cap Growth Fund	40.2	-21.7	-32.3
Source: Morningstar. Returns through April 10. Holdings as of most recent portfolio reports.

As you can see, the big tech bets in the no-load (BFOCX)Berkshire Focus and broker-sold (MDFOX)Merrill Lynch Focus Twenty funds led to a lot more downside risk. Both funds have doubled their average peer's losses this year and over the last 12 months, the direct consequence of tech stakes that were more than double that of their peers. The two funds are run by high-octane tech fans Malcolm Fobes and Jim McCall, respectively, and each has rung up triple-digit gains in the past thanks to their tech bent.

A similar theme plays out among the mid-cap growth funds that made our list. There you'll find high-profile tech fans like Garrett Van Wagoner and Jim Oelschlager, who co-manage the (POGSX)Pin Oak Aggressive Growth fund. Each of these fellows' "diversified" growth funds looks a lot like the tech-sector funds they also run. If you own these tumbling funds or are brave enough to be considering them now, it's obviously best to view them as tech funds. That means they should get 10% or less of a diversified stock portfolio's money.

The ranks of diversified growth funds with jaw-dropping tech stakes were deeper just a few months ago. As tech stocks showed little reprieve, however, some managers started selling.

Manager Michael Sutton has sharply reduced the big tech positions of the (PBHEX)PBHG Select Equity fund and the (PLCPX)PBHG Large Cap 20 fund, where Merrill Lynch's McCall once called the shots. At the end of September the two funds had 80% and 69% of their money in tech stocks, respectively, according to PBHG's Web site. Just 90 days later, though, through market depreciation and trading, their tech positions fell to 56% and 38%, respectively.

In some ways growth managers hanging on to big tech stakes now are similar to value managers who stuck to their guns in 1998 and 1999, when their style and favorite stocks fell from favor.

Whether you see these fellows as heroes or goats -- and there's a good argument for the latter -- they prove that fund names can lead you pretty far astray.

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