A week after

trimming staff, tech-sick Munder Funds is slashing its fund lineup too.

The Birmingham, Mich., firm has closed its young and sputtering International NetNet, Digital Economy and Framlington Global Financial Services funds to new investors. This spring the firm will ask shareholders to approve merging them into its

(MNNAX) - Get Report

NetNet, Large-Cap Growth and

(MUGAX)

Large-Cap Value funds, respectively.

Over the past few years the firm has earned a reputation for rolling out "ripped from the headlines" funds that seem more the brainchild of a marketer than an investor, so these closings smack of comeuppance.

Fund firms typically merge or liquidate a fund because it's too small to be profitable -- most funds need between $80 million and $100 million to cover costs -- and performing too badly to attract attention and money. As we

note in this week's Mutual Fund Monday package, an ocean of small, punch-drunk funds have these traits, including these three funds launched just last year.

All three are in the red and are trailing the

S&P 500

. The $11.9 million Digital Economy fund, a big-cap growth fund managed with a tech bias, lost 39.4% from its Sept. 19 start last year through Oct. 31. The $6 million Framlington Global Financial Services fund started on June 30 last year and had lost 12.9% by the end of October. And the $89.7 million International NetNet fell 62% between its April 11, 2000, launch and the end of last month.

The funds these portfolios will merge with aren't exactly thriving either. The $16.8 million Munder Large-Cap Growth fund, formerly called the Focus Growth fund, fell 38% between its June 30 launch last year and Oct. 31. The S&P 500 fell 21.1% over the same stretch. The Large-Cap Value fund, formerly called the Equity Income fund, has gathered $161 million since its 1994 launch, but its 7.1% annualized gain over the past five years trails the S&P 500 and some 70% of its peers, according to Chicago fund tracker Morningstar.

And the ravaged NetNet fund is a poster child of the mania surrounding tech and dot-com stocks. One of the first Net funds launched back 1996, the fund rode the Net wave to big gains reaching a crescendo in 1999 when the fund rocketed up 176%. It closed to new investors in April of last year, coinciding with its international sibling's launch, as the largest Net fund out there with $12 billion in its coffers.

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Thanks to redemptions and its 62.2% loss over the past 12 months, the fund now has $1.3 billion in assets. Two of its managers, Alan Harris and Steve Appledorn, were laid off last week. The fund trails the S&P 500 and its average peer over the past one, three and five years.

The firm's outsize bet on the tech sector at its peak illustrates why fund companies are sometimes accused of developing funds based on marketing opportunities and not necessarily solid investment criteria -- "making what sells" rather than selling what they make, to borrow a phrase from Vanguard's Jack Bogle.

While most fund companies might have one tech fund, for instance, Munder launched three: NetNet, International NetNet and Future Technology. The latter two were born in 2000 and 1999 as record billions gushed into tech funds and tech stocks hit thin-air valuations. All three have lost more than half their value over the past 12 months.

Munder is hardly the only fund company that hopped on the tech bandwagon just as the Nasdaq's siren song stopped. In 1995 there were 21 tech funds, and even after some 20 liquidations and mergers this year, there are some 150 out there today.

The firm still has focused funds whose names and strategies seem gimmicky. Munder offers two health care funds, for instance, the Framlington Healthcare fund and the Munder Bio(Tech)2 fund. The latter launched a year ago, and the firm's Power Plus fund, an energy fund with a bias toward alternative energy plays, launched in March during the California power crisis.

As Munder and other firms unwind some ill-conceived funds launched pre- and postbubble, we're reminded that the diversification and long-term thinking preached by fund companies are sensible -- even if the industry doesn't always practice what it preaches.

Ian McDonald writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback to

imcdonald@thestreet.com, but he cannot give specific financial advice.