The biggest Net fund out there is reopening to new investors next Wednesday, but it's hard to imagine there'll be a line at its door.
On May 23, the broker-sold
(MNNAX Quote - Cramer on MNNAX - Stock Picks)Munder NetNet fund, which is down nearly 60% over the past 12 months, will reopen to new investors, according to a company spokeswoman. The ravaged fund
shuttered its doors on April 17 last year amid steep cash inflows, with about $12 billion in its coffers. Thanks to brutal losses and investor redemptions, though, the fund's assets stood at just $2.4 billion at the end of April, according to the firm's Web site.
When sputtering funds open their doors, the spin is always that they're seeing great value in the market. But this move is probably most accurately viewed as just
another Net fund trying to survive the mercurial industry's continuing blue period.
And what a blue period it has been. Tech funds of all flavors have absorbed a vicious beating since the
Nasdaq Composite peaked on March 10, 2000. As usual, the most speculative and pricey fare fell first and furthest, putting Net funds like Munder's squarely in the path of a bear market.
Since the Nasdaq's peak, the Munder NetNet fund is down 76%, in line with
TheStreet.com Internet Sector index's 79% tumble over the same period, according to
Baseline/Thomson Financial. Broader tech funds have suffered less. The no-load
(PRSCX Quote - Cramer on PRSCX - Stock Picks)T. Rowe Price Science & Technology fund, for example, the nation's largest tech fund with $6 billion in assets, is down some 60% since the Nasdaq's peak.
| Caught in the Net |
 | Munder NetNet Fund | Avg. Tech Fund | S&P 500 |
| YTD Return | -25.5% | -19.7% | -2% |
| 1-Year Return | -59.5 | -43.9 | -10 |
| 3-Year Return | 12.4 | 17 | 6.5 |
| Source: Morningstar. Returns through May 17. |
The Munder fund did ring up a 175.7% gain in 1999, so longer-term investors might assume that the fund's subsequent losses haven't completely wiped out those heady gains. Unfortunately, for many, that's probably not the case. A gush of money flowed into tech funds after 1999's frothy tech returns, just in time for the party to end. A $10,000 investment in the fund made on Jan. 1, 2000, would've been worth only about $3,100 on May 1, according to
Morningstar.
Even if the same investment were made at the start of 1999, it would still be underwater to the tune of $1,400.
| Not So Happy Returns |
| $10,000 Invested in the Munder NetNet Fund On... | Would Today Be Worth... |
| Jan. 1, 1999 | $8,536.79 |
| June 1, 1999 | $5,987.98 |
| Jan. 1, 2000 | $3,097.44 |
| Source: Morningstar. Returns through May 1. |
At the start of 1999, there were just four Net funds, but when that quartet averaged a 202% gain that year, fund companies rolled out more, hoping to strike while the iron was hot. In the wake of the subsector's collapse, Net funds have become both a tough sell and an eyesore. Over the past year, funds like the
Zero Gravity Internet,
StockJungle.com Pure Play Internet and
deLeon Internet have all liquidated. More prominent funds like the
Strong Internet fund and the
Merrill Lynch Internet Strategies fund are asking shareholders to approve mergers into broader tech funds.
Munder's NetNet fund is certainly profitable due to its size, but the firm also launched two other tech funds during the past couple of years -- the
(MNIAX Quote - Cramer on MNIAX - Stock Picks)Munder International NetNet fund and the
(MTFAX Quote - Cramer on MTFAX - Stock Picks)Munder Future Technology fund. Like the behemoth NetNet fund, this pair has also trailed the average tech fund, according to Morningstar.
Meanwhile, if you've got some money you don't need for at least five or 10 years,
here's a look at some tech funds that topped their peers in sunny 1999
and in the gloomy days since. Given the track records of these funds, there's little reason to look into Munder's floundering fare.
Ian McDonald
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