NEW YORK (CNN/Money) -
Talk about your tech fund these days and you sound like comedian Rodney Dangerfield.
My tech fund is so bad it lost 80 percent in the past two years. Or, my tech fund is so bad my manager just got fired.
Gallows humor may ease your pain, but it won't change the sorry numbers on your statement. The funds lost 31.7 percent in 2000, and 38.9 percent last year, according to Morningstar. This year, it's just more of the same: the category is down 12.2 percent as of April 19.
It's raising the question about whether the average investor with a diversified portfolio even needs a tech fund (or if they ever did.) Maybe you can do without such a goat in your fund lineup?
Tech funds: Going, going, gone
Tech funds have been heading south ever since the Nasdaq peaked on March 10, 2000. (Click here for more on the tech fund implosion.) Indeed, about 40 tech funds have closed or merged since then.
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Get your tech fix with these funds:
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And few funds have managed to buck the trend. Out of about 150 funds tracked by Morningstar, only seven are making money this year, most by using shorting strategies. These include Potomac Internet/Short Fund, up 15.9 percent, Marketocracy Tech Plus, up 5.8 percent, and ProFunds Ultra Semiconductor, up 0.8 percent.
The only signs of life among tech funds are from those that invest heavily in semiconductor stocks, said Chris Traulsen, an analyst at Morningstar. The Philadelphia Semiconductor Index is up 6.8 percent this year. (Click here for more on the outlook for chip stocks.)
Winners include Fidelity Advisor Electronics, up 5.9 percent, and Rydex Electronics, up 3.4 percent. At Rydex Electronics, for example, top holdings as of April 20 include Applied Materials, up more than 30 percent this year, and Texas Instruments, up nearly 19 percent.
The fun pretty much ends there. Telecom equipment stocks and Internet stocks have dragged down the category. Among the biggest losers are Morgan Stanley Technology, down 16.3 percent, and Goldman Sachs Internet, off 16 percent.
Diversified funds that like tech stocks
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Depressed yet? You're not alone. But there are plenty of diversified stock funds where you can get some tech exposure without betting the farm. Traulsen said you should start by looking at growth fund categories, which tend to have heavier tech weightings.
For example, R.S. Diversified Growth, a small-cap growth fund, has about 23 percent of assets in tech stocks. That's slightly higher than the weighting in the Russell 2000 index of small companies, but still not outrageous.
"Our focus in technology has been in software," said manager John Wallace. Two favorites are Imanage and Support Soft Inc. Imanage provides content management software that allows more than one person access to a document, while SupportSoft provides infrastructure software for ebusinesses.
Both stocks are struggling after a strong fourth quarter in 2001. SupportSoft, for example, is near a 52-week low and lost nearly 10 percent on Monday. But Wallace thinks they have even better potential than when he bought them last year.
"These two companies met or exceeded estimates for the first quarter," Wallace said. "It's only a matter of time before Wall Street notices."
The fund is down 9 percent this year but has a five-year average gain of 22 percent, according to Morningstar.
If you're a fan of index funds, you might want to try Vanguard Growth Index, which tracks the S&P 500/Barra Growth Index, Traulsen said. That index includes growth stocks and has a 25 percent weighting in technology. The fund is down just 3.7 percent. Its top tech names include Microsoft, Intel, IBM and Cisco.
And in large caps, a solid choice is Harbor Capital Appreciation, Traulsen said. It has more than 21 percent of assets in semiconductors, computer, software and biotech stocks as of March 31. (Click here for more on Harbor Capital Appreciation.) The fund is off 4.8 percent this year. (Again, that's better than tech funds are doing.)
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