I Own What?! Net Funds' Odd Innards

You might not expect a Net fund to invest your money in companies that make chocolates or batteries or coffee tables, but it might do just that.

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There aren't many companies that don't have a Web site or haven't used the Internet to do business. At the same time, most pure-play dot-com stocks that were once in the market's sweet spot are now furthest from it. Consequently, many Net-fund managers have stretched their definition of a Net stock to include companies like Energizer(ENR Quote), Rocky Mountain Chocolate Factory (RMCF Quote) and Ethan Allen Interiors(ETH Quote). Today's I Own What?! combs through the Net-fund pack and pulls out some downright puzzling picks that are supposedly justified by the Net's ubiquity.

"Is there any part of the economy where the Net isn't involved now?" asks Chris Traulsen, a Net and tech-fund analyst with Chicago fund tracker Morningstar. "It's easy to make an argument for owning a wide spectrum of stocks in a Net fund."

The upshot: There might not be another fund type that better illustrates why you can't assume where a fund will invest your money given its name or classification than Net funds.

The broker-sold (GITAX Quote)Goldman Sachs Internet Tollkeeper fund, for instance, had just half of its $817 million in tech stocks at the end of October. Among its holdings were battery maker Energizer, movie studio Metro-Goldwyn-Mayer(MGM Quote), Spanish-language TV broadcaster Univision(UVN Quote) and radio broadcaster Westwood One(WON Quote). The fund is down 33.9% over the past year, compared with a 41% fall for the tech-fund category in which Net funds are classified. ...