I am a young investor looking for a good fund to put my IRA money into. I currently have it in a fund that tracks the Dogs of the Dow. Would you suggest putting it into the (WWWFX) - Get Report Internet fund for the long run? -- Jeff Balistrere

Jeff,

It sounds like you invest according to an infatuation with fads. That scares me.

Somewhat less frightening is that fact that your strategy might not be in such bad shape.

The popular Dogs of the Dow strategy involves buying the 10 highest-yielding stocks in the

Dow Jones Industrial Average

, then holding them for a year. In effect, you're purchasing 10 large, lumbering value stocks. The stocks in that group tend to be well-established, manufacturing-oriented companies -- names your grandmother might tell you to buy.

But in recent memory, the Dogs approach has been criticized as passe. In 1998, the

(OSDGX)

O'Shaughnessy Dogs of the Market fund, which buys the Dogs of the Dow and 20 other high-yielding stocks, returned only 9.1%, compared with 18.1% for the 30-stock Dow index.

But the Dogs came bounding back during the second quarter of this year with the rebound of value stocks. The O'Shaughnessy fund was up 14.7%, while the Dow rose just 12.5%.

With an Internet fund, you are buying into the new frontier, all those e-"insert word here" companies. Here you'll find a cutting-edge growth company that may or may not be in business in a few years. You're betting on the enormous future expectations of these companies. The area could be very profitable over the long run, but also very volatile and very risky.

Together, these two strategies represent the old vs. the new, legacy companies vs. start-ups, value vs. growth.

The two cross different industries and two distinct (although somewhat narrow) areas of the market, meaning the performance of the two shouldn't march in lockstep. For example, value companies tend to excel at the beginning of an economic recovery, coming out of a fairly long down cycle. Growth companies, however, should reign supreme toward the crest of a business cycle, when investors fancy the companies that are flourishing regardless of uncertainties about the economy's direction.

In theory, these two strategies should complement one another. "For him to have both of those actually makes a lot of sense," says Robert Horowitz, a financial adviser at Stamford, Conn.-based

New England Investment Management

.

You already have a Dogs fund in your IRA, and you are looking at the Internet fund. In its short history, this fund has been the best in a very small batch of funds focusing on the Internet. Plus, the fund doesn't carry a load. However, Ryan Jacob, the manager who delivered these returns, recently hit the road to

start his own firm. Right now, you should proceed with caution with this fund.

The remaining Internet funds that have any sort of track record are few. The

(MNNAX) - Get Report

Munder NetNet fund is more diversified than some Internet funds and has close to a three-year track record. Its biggest shortcoming might be the fact that it carries a 5.5% load on its A-class shares.

You'll see plenty of new funds coming out, and Ryan Jacob officially announced his new fund. (The contact number is 212-698-0782.) So you could always wait to invest your Internet money if you can't find something right now.

More important, some financial advisers think your portfolio should be even more diversified to increase stability. Together, a Dogs fund and an Internet fund are an acceptable fit. Some advisers suggest adding a broadly diversified index fund as a core position, one that tracks the

S&P 500

or the

Wilshire 5000

, perhaps. (You may want to use an index, which is already tax efficient, outside of a tax-deferred IRA.)

Or instead of an index fund, you might try a pure growth fund. "My advice if you're a young guy is you would probably want to be more toward the growth side," says Jim O'Shaughnessy, manager of his eponymous Dogs fund. "We always recommend that for younger clients. As you get older, you get more interested in Dogs-type funds." You might want to look at a fund like

(FDGRX) - Get Report

Fidelity Growth Company or even the

(JANSX)

Janus fund.

At your age, you should be able to handle a little more excitement.

Vanguard Reaches for the Wite-Out

Even a firm that's obsessed with the smallest of details is still bound to slip up on occasion.

This week, I noticed a slight but key mistake in a filing for a

Vanguard

fund.

On the EDGAR database, I was combing through the statement of additional information for the

(VTRIX) - Get Report

Vanguard International Value fund, filed under the "Vanguard Trustees' Equity Fund."

In this actively managed fund, Vanguard uses a performance-based incentive to reward the adviser,

Phillips & Drew

of London, when the fund does well and punish the firm when the portfolio does badly. The sliding performance-based incentive is tied to the fund's benchmark, the

MSCI EAFE

index.

But when I came to the fee table, I found a big surprise. The table says that if the fund beats its benchmark by 13.5 points, half of the basic fee is withheld. That would suggest the managers get penalized for dramatically outperforming the benchmark.

Big mistake. That minus shouldn't be there, says Vanguard. The company says it will fix the error.

And I thought I was onto a good story.

Send your questions and comments, along with your full name, to

deardagen@thestreet.com.

Dear Dagen aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.