Broadway's popular 2006 revival of A Chorus Line is a song-and-dance production about a song-and-dance production. In a similar vein, the $17.26 million ( KMKNX) Kinetics Market Opportunities fund uses stock markets to buy shares in -- you guessed it -- stock markets.

Like many of its fellow open-end mutual funds, Kinetics Market Opportunities executes trades on the Nasdaq Stock Market ( NDAQ ), among other places. It also owns shares in the Nasdaq, along with an international array of other bourses, commodities exchanges and related investment organizations. With securities trading volume exploding and stock and commodities exchanges constantly generating headlines about potential alliances, mergers, partnerships and other combinations, this fund was an idea waiting to happen.

Kinetics Market Opportunities was launched at the end of January 2006, just weeks prior to the signal event that sealed the legitimacy of shares in stock markets as investments. On March 7, the NYSE Group ( NYX), a for-profit, publicly owned company, was formed out of the merger of the New York Stock Exchange and publicly owned Archipelago Holdings. It was the largest-ever merger among securities exchanges.

The stock and commodity exchange businesses aren't what they used to be. Trading floors with brokers shouting and waving in seeming pandemonium are rapidly evaporating. Replacing them are computer servers that do the same work at lightning speed and without the expense of maintaining the physical and clerical infrastructure needed to support floor trading.

The Kinetics Market Opportunities has rewarded its early believers with impressive returns that are all the more attractive because it is sold without a load, or sales commission. In the three months ended Dec. 31, its total return of 16.43% ranked it 305th of 14,161 stock funds tracked by TheStreet.com Ratings. For the six months ended Dec. 31, its 23.07% gain was the 295th highest among the stock funds. (TheStreet.com Ratings treats each share class of a fund as a unique fund.)

From inception through the end of last year, the fund returned 20.85%.

Because the fund has a track record of less than three years, it is not currently rated by TheStreet.com Ratings.

The Kinetics fund's total expense ratio of 1.46% leans toward the higher end of that scale for open-end funds. But a ratio of that magnitude isn't uncommon for highly specialized funds, especially ones with smaller asset bases, like this one. (The expense ratio is an estimate by the fund, based on the time it has been in existence.)

Besides providing its shareholders with exposure to a currently hot industry, the geographic diversity of Kinetics Market Opportunities makes the fund a global play. It offers exposure to Singapore, Hong Kong, Japan, London, Europe and South Africa. With ownership of commodities exchanges as well as stock bourses and other securities organizations, the Kinetics fund also offers a degree of diversification by asset class within the "exchange" sector.

Betting on Securities Exchanges
Kinetic Market Opportunity fund's top holdings
Name Ticker Pct. of Portfolio
Singapore Exchange SGX.SP 5.10%
Nasdaq Stock Market NDAQ 4.85%
Intercontinental Exc. ICE 4.28%
JSE Ltd. * JSLMF.PK 4.21%
CBOT Holdings Inc. BOT 4.13%
NYSE Group Inc. NYX 4.13%
International Secs. ISE 3.90%
Hong Kong Exchange HKXCF.PK 3.77%
Osaka Securities Exc. OSCUF.PK 3.42%
Chicago Mercantile CME 3.03%
BAM Invts. Corp. BNB CN 2.55%
Goldman Sachs Group GS 2.38%
London Stock Exchange LSE LN 2.36%
Euronext ERXTF.PK 2.10%
Bear Stearns Cos. BSC 1.86%
Sum of Top Holdings 52.07%
*Formerly Johannesburg Stock Exchange
Source: TheStreet.com Ratings

Widows is a financial analyst for TheStreet.com Ratings. Prior to joining TheStreet.com, Widows was senior product manager for quantitative analytics at Thomson Financial. After receiving an M.B.A. from Santa Clara University in California, his career included development of investment information systems at data firms, including the Lipper division of Reuters. His international experience includes assignments in the U.K. and East Asia.

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