Fund Openings, Closings, Manager Moves: Global Innovation Joins Tech Parade

Talk about a broken record. Yet another tech fund has rolled off the assembly line, this one a global version of Pimco's hot (PIVAX Quote)Innovation fund. More than 25 new tech funds have been launched since Jan. 1.

Like many of these new tech funds, Global Innovation has few limits. Manager Dennis McKechnie can invest in tech or "tech-related" companies of any size around the world. Despite its name and Innovation's 90% tech weighting on Feb. 29, the new fund isn't required to "invest exclusively in companies in any particular business sector or industry," according to its prospectus. Essentially the fund, which launched Monday, is structured as a global, all-cap growth fund.

McKechnie has worked on Innovation for a few years, but started managing the fund solo only at the start of last year. Since 1999's growth-obsessed market suited the fund's tech-heavy momentum style perfectly, its 139% return last year isn't necessarily the ringing endorsement it normally would be. Keep in mind, the average tech fund gained 135% last year, according to Lipper.

Neither Lipper nor Morningstar had the fund's performance since Jan. 1 through Monday's close. Like many tech-heavy funds, Innovation dropped more than 10% in yesterday's selloff.

Although the new fund has a manager with some experience, it's not the cheapest on the shelf. Class A shares levy a maximum 5.5% front-end load, or sales charge, while class B and C shares' maximum back-end loads are 5% and 1%, respectively.

Class A shares' annual expenses are 1.65%, while class B and C shares' are 2.4%. The average tech fund's expense ratio is 1.77%, according to Morningstar.

Smith Barney Shelves Contrarian

Smith Barney is calling it quits with its $45 million Contrarian fund. In a filing with the Securities and Exchange Commission, the brokerage house is asking shareholders of this laggard to merge the fund into the much larger and better-performing Fundamental Value fund. A shareholder vote is scheduled for May 26.

Smith Barney must figure that in this market, value has been a pretty contrarian play. Still, Fundamental Value has gotten some remarkable results by following a looser value definition.

Portfolio manager John Goode has a 22% stake in technology, while his large-cap-value peers have just 12% in that sector. That bet helped the fund rack up a 30.9% return for 1999.

Contrarian, as its name implies, goes the other way, and has just 8.6% in the sector. The fund shed 5.3% last year and 1.1% the year before. It has managed to come out in positive territory so far this year, up 5.4%.

Adding Contrarian's $45 million in assets to Fundamental Value's $800 million won't mean much for either fund, says Morningstar analyst Catherine Hickey.

John Stoeser, portfolio manager of Contrarian, follows a strategy of buying stocks trading at their 52-week lows in out-of-favor sectors. But a holding in Philip Morris (MO Quote) in 1999 proved to be detrimental.

"It's been kind of a sinking ship here,'' Hickey says. "This style of investing has been so out of favor for so long, that people had been bailing out anyway.''

Putnam Unveils Balanced Fund

Putnam Investments kept a balanced fund up its sleeve for more than five years and rolled it out Monday in the middle of a steep Nasdaq selloff.

The firm has quietly managed the fund in incubation since January 1995. When a fund is incubated, it sells shares only to company employees and their families. Essentially, incubation is a proving ground for new funds in development.

Over the years, the fund's growth bent has helped it easily beat the average balanced fund, according to Morningstar. It has performed inline with growth-oriented balanced funds such as (JABAX Quote)Janus Balanced. But given the market's recent turn away from growth stocks, the fund may not be the conservative equity play balanced-fund fans are looking for.

The fund typically splits its portfolio 60/40 between large-cap growth stocks and U.S. government bonds, respectively. The stock portion will be run in the same style as Putnam's (POGAX Quote)Growth Opportunities fund and managed by David Santos and Manuel Weiss Herrero. Santos co-manages Growth Opportunities and Herrero co-manages (PINVX Quote)Investors and (PEQUX Quote)Global Growth. The tech-heavy Growth Opportunities has an annualized return of 45.2% over the past three years, beating 87% of large-cap-growth funds, according to Morningstar.

Kevin Cronin will manage the bond portion of the fund in the same style as (PAGVX Quote)American Government Income, which he co-manages. The fund beats the average intermediate government fund over the past one-, three- and five-year periods, according to Morningstar.

The new fund isn't necessarily the cheapest on the rack. Class A and M shares charge maximum 5.75% and 3.25% front-end loads, or sales charges, respectively. Class B and C shares' back-end loads max out at 5% and 1%, respectively.

The fund's annual expenses are 1.13% on Class A shares, 1.63% on Class M shares, and 1.88% on Class B and C shares. The average balanced fund has a 1.31% expense ratio, according to Morningstar.

See Monday's Fund Openings, Closings, Manager Moves .