A few tech funds are worth a flier

Among last year's losers are some possibilities for profitable rebounds

Dollars & Sense

January 28, 2001|By Russel Kinnel | Russel Kinnel,MORNINGSTAR.COM

I just can't resist sifting through the big losers of last year. Not only do you get to see a list of the formerly smug Internet heroes, but also find some intriguing rebound plays. I took a look at funds that lost 30 percent or more last year to see if there were some buys. Most were over-concentrated and under-experienced, but there were a few very speculative keepers.

Fidelity Select Technology: This fund lost 32 percent last year as a bet on networking stocks blew up on manager Larry Rakers. However, that loss was right in line with the tech-fund average, so it's not all that bad. You also might be frightened by the fact that the fund has a revolving door on the manager's office: Rakers is the seventh manager in 10 years.

Despite the manager changes, Fidelity's strong tech research usually wins at the end of the day. The fund ranks in the top 10 percent of tech funds over the past 10 years. As Fidelity's most diversified tech fund, this one at least offers a touch more stability than their other tech offerings.

Turner Technology: This one is much bolder than Fidelity, so watch your step. Its loss last year was 33 percent. Lead manager Bob Turner runs a concentrated momentum strategy, and it has resulted in a wild ride in its 18 months. Still, I like this fund's prospects because Turner has built strong records at his growth funds. You can't do that without having some ability in tech stocks.

Putnam OTC Emerging Growth: This fund isn't officially a tech fund, but it's close. It has 85 percent of assets in tech and suffered a horrendous 51 percent loss last year. This is a similar play to Fidelity Select Tech. Putnam's got some great analysts, and I expect their skill will help this fund to rebound. If there's a problem at a Putnam fund, you can be sure they'll fix it.

I wouldn't use it as a normal mid-growth fund because of its huge tech bet, however. I'd probably keep it in the single-digit percentages.

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