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Nothing but 'Net funds
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April 16, 1999: 5:20 p.m. ET
Monument fund assets soar to $26M in five months; fund fields 600 calls a day
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NEW YORK (CNNfn) - David Kugler has been a risk-taker since his days as a U.S. Navy pilot, so perhaps it is no surprise that he launched an Internet fund.
"It's all risk management," said Kugler, 39, president of Monument Funds Group in Bethesda, Md.
Assets in Kugler's Monument Internet Fund have soared to $26 million since he started it in November, and the fund is up 130 percent as of Friday year to date, according to fund researcher Morningstar.
The fund gets 600 phone calls a day from interested investors -- including people who have never been on the Internet but realize its power, Kugler said.
"People may say (Internet investing) is a flash in the pan, but I truly think they are wrong," he said. "Anybody who understands anything, understands the power of the Internet."
And Kugler has company. In addition to the Internet Fund, the WWW Internet Fund and the NetNet Fund, three other funds have hit the market or will be available to investors soon.
Unified Select Internet Fund started trading last week, while the AIT Internet Fund will debut May 1.
Another fund in the works is the LCM Internet Growth Fund, a closed-end fund, said Norman Fosback, editor-in-chief of the investment newsletter Mutual-Fund Forecaster.
A closed-end fund has a limited number of shares and trades like stock at a premium or discount of its Net Asset Value (NAV) on the New York Stock Exchange.
Given all of the fascination with Internet-related equities, Fosback said it would be interesting to see if the LCM Internet Growth Fund starts trading at a premium right away.
"It is obviously part of the (Internet) bubble," Fosback said about all of the new funds. "But in general, sector funds are beneficial to investors."
The Monument Internet Fund's top holdings include RealNetworks (RNWK); PSINet (PSIX); America Online (AOL); Ameritrade (AMTD); DoubleClick (DCLK); and CNet (CNET), among others.
Kugler spent 10 years at Merrill Lynch and PaineWebber before starting his own company in January 1997. Before joining Merrill Lynch, he was a lieutenant commander in the U.S. Navy, flying EA-3B Skywarriors nicknamed "Whales" on and off aircraft carriers.
Kugler does not think the field of Internet funds is too crowded. In fact, he said he is encouraged that big fund families like Fidelity are getting a piece of the action.
He said he was driving in his car recently when he heard an ad on the radio from Peter Lynch of Fidelity recommending some Fidelity select portfolios as a way to invest in Internet stocks.
"I almost drove off the highway when I heard that," Kugler joked. "When Fidelity puts Peter Lynch in advertisements about Internet stocks, that's a good thing…As the Internet becomes more mainstream, it's only going to improve the wealth of those folks who invest."
Compaq Computer's (CPQ) warning that earnings will be 50 percent less than expected in the first quarter could sting a lot of big mutual funds.
According to Morningstar, 222 mutual funds owned a stake in Compaq that is 2 percent to 7 percent of their assets as of March 31.
The top three funds, each with a 7.01 percent stake, are Lipper U.S. Equity Fund premiere shares; Lipper U.S. Equity Fund retail shares; and Lipper U.S. Equity Fund group retirement shares for institutional investors.
(Lipper Inc. is a private company that isn't affiliated with Lipper Analytical Services, a fund research company).
Michael Visovsky, one of the managers, declined comment on the holdings.
But one fund industry executive who did not want to be identified said he does not think the impact would be long-term.
"I bet you this is just a one-day thing," he said. "This isn't just a box company."
How well are stock funds doing overall? According to Mutual-Fund Forecaster, not so well. In fact, the performance of about 4,000 domestic and international stock funds that the newsletter tracks fell short of safe money market funds over the last 19 months, Fosback.
The equity funds earned 6.5 percent on average in that time, compared with 7 percent for money market funds, he said.
"I think it's shocking," Fosback said. "On balance, it's been a falling tide for the market as a whole except for a few large cap stocks. The same is true for mutual funds."
Pax World Fund celebrated a milestone this week as it passed the $1 billion mark in assets, the company said. The fund, established in 1971, is the second-largest socially-responsible mutual fund behind Dreyfus Third Century Fund, according to Laura Lallos, an analyst at Morningstar.
"It (Pax World) is a fund that's been around a long time," Lallos said. "They've slowly and steadily grown."
In the unpredictable Latin American markets, several mutual funds stood out as winners and losers for the week, according to Lipper Analytical Services.
The top three funds for the week April 8 through 15 are Templeton Global Investment Trust Latin America Fund; up 5.97 percent for the week and 27.64 percent year-to-date as of Thursday; Wright Equifund Equity Trust Mexico Fun, up 5.74 percent for the week and 37.84 percent so far this year; and WEBS Index Fund Inc., Mexico index series, which climbed 5.14 percent for the week and 41.01 percent year-to-date.
On the other end of the spectrum, the poorest performers were Kemper Latin America Fund, which grew 1.08 percent for the week and 18.65 percent year-to-date; Chasevista Latin American Equity Fund, up 1.40 percent for the week and 19.34 percent so far this year; and Ivy South America Strategy Fund, up a weekly 1.48 percent and 10.39 percent year-to-date.
Lipper's Latin America Fund concentrates its investments in equity securities with primary trading markets or operations in Latin America region or in a single country within this region. 
-- Staff writer Martine Costello covers mutual funds for CNNfn Interactive. If you have any comments about mutual funds, you can contact her at cnnfn.interact@turner.com
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