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Investors in biotech and health care funds proved fickle partners: They loved 'em, then left 'em.

During biotech stocks' white-hot phase in February, investors piled more than $4.3 billion into health care funds -- much of that aimed at the soaring biotech sector. But in March, when that highflying sector took a dive, flows slowed to a trickle, with just $33 million going into the 60-odd health care funds, according to

Financial Research


Fund veterans say that last month's money drop was a classic case of performance chasing.

But now that biotechs are on a tear again, investors aren't likely to come back into the funds with the same amount of enthusiasm they did early this year. "Mutual fund money will continue coming in, but at a much more tempered pace,'' predicts Faraz Naqvi, portfolio manager of the


Dresdner RCM Biotech fund.

The recent rout hasn't been enough to erase all of the earlier gains. Health care funds are up 16.2% year to date through April 28, according to


, which is ahead of the 2.88% return of the typical technology fund.

Though there are just a handful of pure biotech funds, those investing in the broader health care industry had been moving into that high-octane field. But now, fund observers say health care offerings were most likely given pause after the biotech drop. Even growth-charged

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Janus Global Life Sciences fund has added a few pharmaceutical names, according to its last disclosure. And its most recent returns don't keep pace with the heady gains seen in the biotech sector, an indication that it may have lightened its biotech load.

Some of the past year's biggest health care winners were the ones that suffered as investors looked elsewhere. The

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Fidelity Select Biotech fund, which racked up gains of 83.3% over the last 12 months ending April 28, saw an outflow of $377 million in March. The month before, it took in $1 billion and almost $900 million in January.

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Franklin's Biotech fund attracted $588 million in new investment in February, only to see $4 million leave the month after.

Not all health care offerings saw outflows. Janus's Global Life Sciences fund tacked on another $100 million in fresh investment in March and Dresdner's biotech fund piled on an additional $89 million, the same amount as it had in February.

Biotech "is one of the most opportunistic sectors that mutual funds offer,'' says Dave Haywood, financial research analyst. "We used to think that tech was opportunistic, but not any more.''

Indeed, investors haven't shown a willingness to stick to their biotech guns as they have in the recently embattled technology sector. In March, tech stocks also started a steady and painful slide, in tandem with biotechs. But tech investors were unfazed, upping the pace of their investments into the sector. Conversely, a couple of down days in biotechs -- after President


and British Prime Minister

Tony Blair

on March 14 said the scientific knowledge to be gained from the Human Genome Project should be public -- was enough to give investors pause to the whole health care arena.

Investors view technology and health care differently, Haywood says, because they didn't have much opportunity to develop any loyalty to biotech stocks, since their rise and fall were so precipitous.

Investors moved into biotech fast and furiously. Hearing of the market's wild gains, shareholders wanted a piece of the action, says Diahann Lassus, a financial planner in Whertley, N.J. "They wanted to know why those funds had gone up so much, and why they weren't in them,'' she recalls. But the picture is different today. "I haven't heard about biotech from my clients in a while,'' she says.

Managers of health care funds say shareholders won't be disappointed if they stay in biotech.

"We're very confident in the fundamentals of this area,'' says Samuel Isaly, portfolio manager of

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Eaton Vance Worldwide Health Sciences. "And it will be reflected in much higher prices than today.'' Isaly says he hasn't made portfolio shifts out of biotech, even as pharmaceuticals started to look good again. Since March 7, the

American Stock Exchange Pharmaceutical

index is up 27.5% through May 1, while the

American Stock Exchange Biotech

index is off 32.3%, even with yesterday's gain of 6.6%.

The only changes he's made is to move away from companies that don't expect to show profit for several years and into those that plan to be in the black much sooner.

Isaly says the biotech sector wasn't overvalued during the two-month run-up. In fact, it may get higher. "I'm not sure it was unjustified,'' he says. Naqvi seconds that view. "Investors are finally realizing that this is a legitimate sector,'' he says. "It is actually producing products and drugs.''

But advisers are counseling caution. Gayle Buff, a financial planner in Newton, Mass., says she likes the long-term prospects of the sector, but it still may be early in its evolution. "It's only a matter of time before we see major developments, but it's a slow process,'' she says.