Tiny Monument Fund Rides the Internet Wave to the Top

The $25 million entity emerges from a pack of Internet funds to be the top performer of 1999.
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In the highflying world of the Internet, one Web-based fund has gone a little bit higher.

The

(MFITX)

Monument Internet fund has unseated Ryan Jacob's

(WWWFX) - Get Report

Internet fund as the top performer of 1999.

Monument posted a 131% return through the first week of April, according to

Lipper

. The Internet fund, which had been the top-performing fund for most of 1999, has returned 127% year to date, more than enough to hold second place.

In the one-year rankings, the $500 million Internet fund leads with a 12-month return of 385%. (No, that's not a typo.)

Monument's No. 1 ranking is notable for a fund that got started only last November. Its assets have ballooned to $25 million from just $5.5 million in February.

The fund's portfolio manager, Alexander C. Cheung, says the Internet is still in its infancy.

"In the next year or two, we're going to move into the second stage of the Internet," he says. "Because businesses have more broadband access, the next stage of the Internet, when it comes, will be the multimedia era." In the meantime, Cheung says he's investing in companies that offer access, service and infrastructure.

That includes companies like

Aware

(AWRE) - Get Report

, which specializes in speeding up Internet access on existing phone lines, and

PSINet

(PSIX)

, the Internet service provider that's been steadily creeping across the globe.

"They're the only company that has a complete, around-the-world loop," Cheung says of PSINet.

Cheung says he has a three- to five-year timeline for stocks he picks and gives special attention to companies with global reach.

At 42, he knows a little bit about the global perspective. Originally from Hong Kong, he went to England to study economics at the

University of London

. While there, he worked for

McDonald's

(MCD) - Get Report

, opening new stores throughout the U.K. He received a master's in economics from the

University of Pennsylvania's Wharton School

and has been working in the investment business for about 10 years.

He's the kind of guy who will still drink a pint with you over a business lunch while espousing the Internet's potential in his excited, accented English.

He says he doesn't try so much to find the next hot stock on the Internet as much as invest in the leaders in the space. That means buying usual suspects like

America Online

(AOL)

,

CMGI

(CMGI)

,

CNet

(CNET) - Get Report

and

DoubleClick

(DCLK)

.

But he also likes companies that haven't spent time in the spotlight, such as Internet banking concerns

Securities First Technologies

(SONE)

,

Telebanc Financial

(TBFC)

and

Net.B@nk

(NTBK)

.

Cheung doesn't buy initial public offerings of Internet companies -- perhaps the closest thing to a money tree the market has to offer -- because the tiny

Monument Funds Group

doesn't have enough clout to get a piece of the hot issues. Started in suburban Washington in 1997 by David A. Kugler, a former retail broker with

PaineWebber

, the firm has only about $40 million under management. Monument launched its first two funds -- the

Washington Regional Growth

fund and the

Washington Regional Aggressive Growth

fund -- in January 1998.

"We're still just the little guy," says Cheung.

He did, however, buy

VerticalNet

(VERT)

and

Vignette

(VIGN)

, two of the first quarter's hottest IPOs, in the secondary market. And he says he picked up

Pacific Internet

(PCNTF)

, which hit 88 when it went public in February, more than a month later when it was in the high 20s. It closed Monday at 93 9/16.

Despite its first-quarter success, there is some downside to the Monument fund. It has a hefty 4.75% front-end load and a 1.9% expense ratio. And the fund has a much shorter track record than Jacob's Internet fund, which sprouted in 1996.

Investors may want to consider those factors when comparing these funds. After all, they do hold many of the same stocks -- 12 of Cheung's holdings can be found in the top 25 of Jacob's fund, and their year-to-date performance is separated by only 4 percentage points. And Jacob has been concentrating on companies that build out the infrastructure of the Internet, too. His fund comes load-free, though its expense ratio is a steep 2%, according to its prospectus.

Jacob is taking his fund's runner-up status in stride.

"We've been back and forth -- it happens," Jacob says. "We're not going to be No. 1 forever."

Cheung, for his part, says there's no guarantee he can stay on top, either. After all, the same forces that put him where he is could bring him tumbling down.

"The return we've had -- half of that is from the market phenomenon," Cheung says. "Prices go up and down every day, and I try not to concern myself with that."