Don't expect those tech funds -- especially the ones loaded with semis -- to outperform the market either this year or next, fund tracking firm Lipper says in a report released today.

According to Lipper analyst Andrew Clark, science and technology stock prices have underperformed the

S&P 500

for the past four years, all the while mirroring the movement of the index. To Clark, that is a signal that any rallies investors may see in these funds over the next two years will be due to a market recovery from the post-bubble lows -- as opposed to a true recovery in sector stock prices.

"Most of the recent move in S&T funds is a sympathy move related to broad market factors and not due to underlying improvements in such industries as semiconductors," says Clark.

He also suggests investors interested in playing market direction these days avoid the greater volatility associated with science and technology funds by switching to a passive vehicle like an exchange traded fund or a tech index fund. Exchange-traded funds, of course, trade much like stocks.

If an investor is bent on purchasing a technology sector fund, Clark suggests taking a look at Internet funds. He is particularly fond of funds that invest primarily in Internet content and Internet commerce. He'd rather shun the funds that invest heavily in the likes of


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Advanced Micro

(AMD) - Get Report





By contrast, the Internet software and services sector -- which is dominated by



and its peers -- is up 55% this year. Meanwhile, the office electronic industries sector of the S&P 500 is up a more modest 3.7%.

First Call estimates suggest full-year earnings growth for the full range of Internet content and commerce industries should exceed 20%, compared to 10% EPS growth for the S&P 500 for the same period.

Meanwhile, he proposes investors shy away from tech funds heavy on semiconductor names -- which, unfortunately, is the majority of S&T funds. The semiconductor portion of the S&P index is down 29.1% this year, and Lipper isn't forecasting much improvement.

"The semiconductor industry is continuing to suffer from a variety of problems that we and other analysts have noted before: inventory problems, the ongoing disinvestment or capitalization shift away from technology firms and into such areas as industrials and the commoditization of technology and the ability of countries such as China to produce for less," says the Lipper report.

Lipper highlights the following Internet-heavy, semi-light funds for interested investors:


Amerindo Technology,

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Jacob Internet,

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Matthews Asian Technology,

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ProFunds Ultra Internet and the


TA Idex Great Companies-Technology.