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Garrett Van Wagoner

runs five different mutual funds -- at least in name.

Examine each fund's holdings, and it's hard to see the difference.

Four of the five Van Wagoner funds had the same top five holdings at the end of December, according to the firm's

Web site.

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"When you own one, you own them all, and when you own them all, you own one," observes John Rekenthaler,


research director.

At the end of 1999, Van Wagoner's


Emerging Growth,

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TheStreet Recommends

Post Venture and


Technology funds all held the following five stocks as their largest positions:

  • Ariba (ARBA)
  • Cobalt Networks (COBT)
  • OnHealth Network (ONHN)
  • Bluestone Software (BLSW)
  • (PHCM)

(The Emerging Growth and Micro-Cap funds are both closed to new investors.)

Ostensibly, these funds have different investment objectives. But you wouldn't know it from looking at their top holdings.

The fifth fund -- Van Wagoner


Mid-Cap -- also had Ariba and OnHealth in its top five.

This heavy concentration helped propel the funds to phenomenal gains last year. The Mid-Cap fund was the only one of the five that failed to return more than 200%.

And these phenomenal gains helped attract assets.

In 1999, the Van Wagoner funds took in $1.1 billion in net assets, bringing total assets to $2.7 billion by the end of the year, according to

Financial Research Corp.

in Boston. In December alone, the funds took in $52 million.

But eager investors who are piling into the Van Wagoner funds should realize they're getting much of the same if they're buying more than one. Sector allocations in the funds closely follow one another. Telecom stocks, for example, range from 10% to 14% of assets in each of the five funds.

That's not to say the funds are


alike. Their median market capitalizations (an indication of the size of stocks in the funds) do vary. The Mid-Cap's is $3.1 billion, compared with $669 million for the Micro-Cap fund, according to Morningstar.

Even so, by investing in a few of these funds, an investor is taking a sizable bet on a narrow segment of the market and a handful of stocks. Each fund has about 50% of its assets in software stocks, for example.

This overlap can boost your portfolio's returns when these names or sectors are doing well, and it can also deprive you of a key benefit of fund investing: diversification.

"That's the whole reason you buy a fund," says Bryan Olson, director of research at

Charles Schwab's Center for Investment Research


And you may not have any protection if these stocks or the high-growth market collapses.

Van Wagoner is known for his aggressive style of investing, and there are only so many stocks he can like. You could argue that one individual has a limited number of superb ideas. The question is, why create five different funds to invest in the same ideas?

Perhaps Van Wagoner can justify putting many of the same names in each portfolio. A spokesman didn't return calls placed Wednesday and early Thursday. But Van Wagoner's Jan. 25 commentary on his Web site touches on the issue. He describes the funds that are still open as "a little bit different."

Holy HOLDRs!

It's looks like

Merrill Lynch


isn't going to stop creating HOLDRs until there's one for every taste.

The firm just filed with the

Securities and Exchange Commission

to introduce three new HOLDRs that divvy up the Internet:

B2B Internet


Internet Architecture

(IAH:Amex) and

Internet Infrastructure


Each security will represent a 20-stock basket that will trade on the

American Stock Exchange

. The structure and purchase constraints of the

existing HOLDRs products will apply to these securities.

Merrill launched its original

Internet HOLDRs


product in September, but that basket really represents what's known as B2C, or business-to-consumer, companies, such as




(AMZN) - Get, Inc. Report


The B2B basket will focus on companies in business-to-business commerce and will own names like

Internet Capital Group


and Ariba.

The Internet Architecture basket will own companies that make the servers, switchers and routers that build the Internet's backbone. You'll find big names like


(CSCO) - Get Cisco Systems, Inc. Report



(IBM) - Get International Business Machines Corporation Report


The Internet Infrastructure portfolio will consist of software and services companies that are powering Internet development, such as

Exodus Communications



Akamai Technologies

(AKAM) - Get Akamai Technologies, Inc. Report


To find the complete holdings of each basket, use

FreeEDGAR to search for the filings. You will need to use the full-text search and the keyword "HOLDRs." Hopefully, Merrill will soon create a Web site for these products.

If you buy these securities on the offering, you'll pay a 2% underwriting fee to Merrill. If you wait until they start trading, you will pay the going commission at your broker. The latter could be cheaper.

Send your questions and comments to, and please include your full name.

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.