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Hedge funds alive and well
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February 26, 1999: 6:13 p.m. ET
And two more companies are offering mutual-fund data to professionals
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NEW YORK (CNNfn) - Small investors might have figured hedge funds would limp off into the sunset after Long Term Capital Management got a $3.6 billion bank bailout last fall and triggered widespread calls for reforms in the industry.
But hedge funds haven't exactly been skulking on the sidelines on Wall Street. In fact, there's been a steady stream of new funds opening in 1999 and investor interest is growing, industry experts said.
"It seems to me the pulse is strong," said Lois Peltz, managing editor at Mar/Hedge, a newsletter that tracks about 1,300 funds.
More than a dozen new funds opened their doors in January, according to Mar/Hedge. The only difference is they're smaller -- and they're using more conservative investing approaches.
The industry saw outflows in each of the last four months of 1998 -- but there were inflows of $12 billion for the overall year, Peltz said. In January, there were outflows of about $2.5 billion, she said.
Chris Felipe, a manager who left MFS Investment Management in Boston this week to launch a new hedge fund with colleague John Brennan, says he sees a lot of opportunities in the market.
"In general, the hedge fund industry is very healthy," Felipe said. "There's a lot of opportunities to exploit the overvaluation in the market."
Hedge funds are unregulated pools of money that use riskier strategies like derivatives and short-selling to increase returns. The average minimum investment is $500,000.
While hedge funds are out of the realm of possibility for most of us, small investors should pay attention to what they do, said Hugh Johnson, chief investment officer at the brokerage First Albany Corp.
"Yes, it creates volatility around the world when they pounce," Johnson said of hedge funds. "As a small investor, you should keep an eye on hedge fund activity…It's going to be a part of our financial landscape. You're going to have to live with that."
Think it's tough to figure out financial returns for your mutual funds? Your broker might not find the job much easier -- and two companies are publishing data that will help investment advisers sift through the information.
Standard & Poor's launched a new Web site called Fund Advisor (http://www.advisorinsight.com) with performance data on 8,600 funds.
The site allows professionals like retail brokers and others to search for a particular fund and screen for different investment objectives. It also contains interviews with fund managers and tips from newsletters.
Meanwhile, Moody's Managed Fund Groups created 29 new indexes to track performance of 1,725 funds classified on their investment style.
The indexes will help financial professionals evaluate how well fund managers are doing against their investment goals, Moody's said.
Finally, here are some winners and losers in the mutual-fund industry. (Every week, we will look at a different category of funds).
In Lipper Analytical Service's science and technology sector, the no-load Amerindo Technical Fund earned top returns with 21.12 percent for the week between Feb. 18 and Feb. 25, Lipper said. The fund has a 13-week return of 93.1 percent and a 1-year return of 194.5 percent. Lipper is a New York fund researcher.
Amerindo has a 42 percent stake in Internet heavyweight Yahoo! (YHOO), according to Morningstar, a Chicago fund-tracker. It also owns Peoplesoft (PSFT) and Siebel Systems (SEBL).
Second on Lipper's list are the Amerindo Technical Fund's Class A shares, which have loads, with returns of 20.95 percent for the week. Third is Monument Internet Fund, with returns of 9.66 percent for the week.
And yes, there are technology funds that aren't reaping huge returns. The biggest loser of the week is Monterey Murphy New World Technology Fund, down 3.39 percent for the week; Fidelity Select Electronics Portfolio, up 0.55 percent; and Sit Science and Technology, up 0.66 percent, according to Lipper.
But here's a good lesson on how returns can be deceiving. Fidelity's fund may be at the bottom of the list for the week, but its long-term returns look much brighter. Over 13 weeks it earned 33.4 percent; over one year, 53.7 percent; over 3 years, 35.5 percent, and over 5 years, 38.2 percent. 
-- Staff writer Martine Costello covers mutual funds for CNNfn Interactive. If you have any comments about mutual funds, you can reach her at the following address: cnnfn.interact@turner.com
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