Portfolio managers rightly say "technology" is too monolithic a label for that now vast sector of the economy. Ditto that for tech funds.

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You expect diversified stock funds in a given category -- big-cap growth funds, for instance -- to have a wide range of returns. After all, they can stash their money in any stocks in any industry sector -- however they wish -- and those different choices lead to different returns.

You don't necessarily expect a wide range of returns among funds focusing on the same sector. But the blooming of the tech sector has made tech funds anything but shades of the same color. (A similar point can be made in other sectors, but given that tech funds have the broadest range

and

took in $43 billion last year -- more than all sector funds in any previous calendar year -- let's focus on them.) The past two years have shown the diversity of tech stocks and funds, underscoring the need for close inspection of a sector fund's narrow or broad taste.

"There are vast differences among tech funds," says Scott Cooley, a senior fund analyst with Chicago-based

Morningstar

. "A number of fund managers have told me over the last year that it's a lot more complicated than 'technology.' In 1999 just about all of them went up but in 2000 we saw different sub-sectors come unhinged at different times."

Indeed, it did seem like all things tech jumped up 1999, when the average tech fund gained 135%. But last year the average tech fund lost about a third of its value and not all tech stocks suffered similarly.

TheStreet.com's Internet Index

fell a stunning 76.3%, while the

Philadelphia Stock Exchange Semiconductor Index

fell a less egregious 19.1%.

This year has been uneven as well, with stocks of PC makers, tracked by the

Philadelphia Stock Exchange Computer Box Maker Sector

index, up 21.8%, while the

American Stock Exchange Networking Index

is down 16.5%. In many ways the stocks hit earliest and hardest in 2000, such as boxmakers who lost more than 39% last year, bounced highest this year as 2000's tech-led correction rotated through tech's subsectors.

Zig- Zagging

Source: Baseline/Thomson Financial. Returns through Feb. 19.

You can see this often painful rotation ripple through the fund ranks, particularly since tech funds have started slicing the vast sector more thinly. Those funds holding last year's big losers like Net stocks and PC stocks are riding high this year, while funds holding last year's best survivors like networking stocks are getting clocked.

Of course, if you didn't do some homework you might not have known which funds are betting on pockets of the sector and which are -- prepare for the fund world's favorite oxymoron -- more diversified sector funds. In looking at U.S. tech funds this year there are vast distinctions in returns that probably weren't easy to predict.

For instance, at face value the broker-sold

(SLMCX) - Get Report

Seligman Communications and Information fund and the broker-sold

(GTTCX)

AIM Global Telecom and Technology funds don't seem that different. Both funds have tech labels; both focus primarily on big-cap stocks, with more than 80% of their money in tech stocks. Last year the former lost 37.5% and the latter lost 38.9%, according to Morningstar. But the Seligman fund is up more than 14% this year and the AIM fund is down more than 24%.

Looking beyond the top- and bottom-five performers, we also see disparity among subsector funds like Internet funds. Yes, the

Investors Capital Internet & Technology

fund is down 19% through Feb. 19, but the much-maligned

(JAMFX) - Get Report

Jacob Internet fund is up almost 4% over the same period.

You're probably wondering what drives such disparate returns. The answer: disparate portfolios. I tossed the portfolios of the top- and bottom-five into separate pots and fished out a cumulative top-10 holdings for each pack. They have exactly zero holdings in common.

The leading funds bet on many of last year's losers, shops whose earnings are tethered to maturing PC sales like chip titan Intel and embattled software behemoth Microsoft. The top-ten among this year's leading tech funds are up more than 13% on average since Jan. 1, but last year they lost almost 24%, according to

Baseline/Thomson Financial

.

And the lagging funds' faves? These are many of last year's better picks, including networkers like

Juniper Networks

(JNPR) - Get Report

and chip shops with ties to the networking business like

PMC-Sierra

(PMCS)

. On average these stocks gained 19% last year; this year they're down almost 20%.

Given the breadth of the tech sector and the growing narrowness of sector funds' focus, it's hard to imagine the issue of divergence among sector funds is going away. Of course, that isn't necessarily good for investors, for most of whom broader exposure makes more sense.

"I think a lot of the industry specific funds are just marketing gimmicks," says Morningstar's Cooley. "I think you have to look at sectors at a finer level, but in a way you shouldn't be offering funds on those levels."

The bottom line is that most fund investors looking for a tech fund should limit it to less than 10% of their portfolio and typically steer clear of feast-or-famine funds because they're probably focusing on a thin slice of the sector at any given time. Sometimes this is clear, as in

Fidelity's Select

sector funds like

(FSCSX) - Get Report

Select Software and Computers or

(FDCPX) - Get Report

Select Computers, that are named for the industry they focus on, but sometimes it's not as we've seen.

Certainly few tech funds have exposure to all tech industries at all times, but some have built up track records that show a somewhat all-weather quality, like Kevin Landis' no-load

(TVFQX)

Firsthand Technology Value fund. I highlighted this fund and some others in a recent column.

If a fund with broad tech exposure is your grail, there are three options that come to mind. One is the no-load

(PRSCX) - Get Report

T. Rowe Price Science & Technology fund, where manager Chip Morris tends to spread the fund's more than $9 billion around the sector. I wouldn't call the fund a highflier relative to its peers, but its 24.1% 10-year annualized return beats the

S&P 500

by almost 7 percentage points, according to Morningstar.

You also might consider the

(TLFQX)

Firsthand Technology Leaders fund if you're looking for a broader, less aggressive approach than most tech funds'. Here Landis spreads his money among companies he thinks either will become leaders or will continue to be leaders in their industries. It sounds like a vanilla strategy, but the fund's 35.6% three-year annualized return beats more than 90% of its peers.

You also might want to check out the

Nasdaq 100 Trust Shares

(QQQ) - Get Report

, which is an exchange-traded fund, or ETF, that tracks the

Nasdaq 100 Index

. The Index is essentially stocks of the 100 biggest, nonfinancial companies traded on the

Nasdaq Composite

and if you're looking for a tech fund you don't have to panic about, this might fit the bill. For more on ETFs, check out

this primer.

If you're thinking a broad tech fund is just too wimpy for you, consider that it would've given a diversified portfolio a nice boost. A model portfolio with 90% of its assets in the

Vanguard 500 Index

fund, which tracks the S&P 500 Index, and a 10% allocation in the T. Rowe Price Science & Technology fund would've beaten the S&P 500 over the last three-, five- and 10-year periods.

This performance, combined with less volatility than more focused tech funds, is hard for most investors to knock.

The Junk Pile

Let's just say I don't agree with my colleague

Jim Cramer's

diatribe against Kevin Landis of the Firsthand Funds.

In his column Jim criticizes Landis, who only runs tech funds, for being too bullish on tech and cockily marketing himself as a Silicon Valley insider. Personally, I'm not interested in a tech fund manager's marketing style or personal traits. I'm interested in performance. Landis' no-load

Firsthand Technology Value

fund, launched in 1994, is among the top-10 tech funds over the past three- and five-year periods, according to Morningstar. Yes, he's down 43.7% the past 12 months, but that beats more than 60% of his peers in this ugly tech market.

As you may know, I've sung the praises of Landis' Firsthand Technology Value fund and I included the fund in a model, low maintenance portfolio I built last week. As you probably don't know, I recommended it when Pam, my own version of the

Trading Goddess

, was looking for a tech fund.

Yes, sector-fund managers tend to make bullish comments on their sector. No, they're not always objective given their investment in the sector's success and their inability to invest anywhere else. But no one can spin performance, and Landis has a record with this fund that's tough to knock.

In his piece Jim says he trusts managers like Dan Benton and Larry Bowman over Landis. This is honest, but not entirely helpful. These folks run hedge funds, which aren't typically available to the average investor. These folks might be great managers, but I can't find a single mutual fund they run, making these comparisons less than helpful, except for the few who can afford to be in or manage hedge funds.

Well, to paraphrase Mark Twain: It's the difference of opinion that makes horse races. If you want to hear from the horse's mouth, tune in Monday for my

10 Questions

interview with Landis.

Fund Junkie runs every Monday, Wednesday and Friday, as well as occasional dispatches. 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.