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Lippert: "We look at the world and see that there's still incredible innovation going on."

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NEW YORK (Fortune) -- Investors looking to cash in on the Internet's increasingly pervasive role in our lives might want to think about expanding their definition of a technology company.

Investors like Michael Lippert, manager of Baron iOpportunity Fund, for example look for companies that are capitalizing and taking advantage of technology, rather than companies that just develop it.

"Every company we invest in, the Internet supports or has changed their business," he says.

Lippert invests in what he broadly defines as the "Internet information technology industry." The fund fell about 32% over a one-year period, according to Morningstar. But it's up 11.4% year to date, beating its mid-cap growth fund category's returns of 1.61%. It has annualized returns of -0.72% over five years - less than ideal but it still beats the S&P 500 index (SPX) (-3.98%). It has about $106 million in assets under management and almost 50 names in its portfolio.

Baron Funds, which launched its first mutual fund in 1987, generally tries to benefit from big trends in society and industries, says Lippert. "The changes brought about by the Internet is simply one of those trends," he says.

In making his investment decisions, Lippert considers whether a company has a sustainable competitive edge, long-term growth, and a strong management team with a long-term focus. But just as Baron Fund looks for what it calls "long-lasting mega trend opportunities," Lippert invests based on themes he sees within the technology industry. Here's what he's looking at:

One major technology trend that Lippert watches is the shift in media consumption from traditional media to online. His goal is to invest in companies like Google (GOOG, Fortune 500), which he says can "monetize those eyeballs" looking for information on the web.

Bankrate (RATE), one of the iOpportunity Fund's top holdings, is a Web site that matches users with financial services, products and information, and it makes money when a user clicks on a listing. Lippert says it has a strong brand name, loads of information and good management.

"The business has been somewhat volatile as we've gone through the financial crisis, but we think it's one of the better business models," he says.

WebMD (WBMD), of which the fund is a top-10 shareholder, also capitalizes on users who are shifting their searches to the Web, but instead with a health-related focus. The health care industry spends billions of dollars each year trying to reach physicians and consumers, but only 2% of that is online, Lippert says.

As the pharmaceutical industry struggles to connect with physicians through traditional forums, Lippert sees further growth potential in an online strategy. Even in this economic climate, he notes that the company expects to significantly increase advertising revenue this year.

Another area where Lippert sees continued growth is the wireless and wireless data worlds. "No one wants to buy a phone that's not a smartphone anymore," he says.

So he invests in companies that provide the core infrastructure that's required to deliver bandwidth. He calls it a very boring but critical business and expects sustained demand for tower space.

Two of his top holdings fall in this category: SBA Communications (SBAC), which is up more than 50% this year, and American Tower (AMT) are both wireless infrastructure companies. Lippert says their businesses don't have a lot of risk, and they have high lease renewal rates.

"They're very steady businesses, the kind of thing that banks are going to want to lend to when they start lending again," he says.

Also a focus for Lippert is enterprise applications and software, which he says has changed the way content is delivered. This includes cloud computing, in which resources like software can be accessed over the Internet.

Right now he's a big fan of Concur Technologies (CNQR), which is an online corporate travel and expense management software company. As you book a trip, it automatically creates an expense report. Lippert believes it's extremely innovative and is the only company of its kind out there today both booking and expense reports on the same platform.

Lippert's fund also holds several companies with hybrid business models that combine software, proprietary data and analytics. IHS (IHS), which provides technical information for industries like energy, has proprietary data going back hundreds of years. At one time databases would need to be updated with software on a regular basis, but now these companies constantly provide updated information automatically via the Web.

Equinix (EQIX), his largest holding, combines all the themes he likes. It provides data centers, which connect and protect data for businesses. Last year the company raised its financial guidance six times and expects to see revenue increase more than 20% in 2009. It's a capital-intensive business, but Lippert likes that it's able to finance all its growth internally and generate 30% to 40% internal rates of return on their facilities.

Even in this economic climate, Lippert still believes there are gems like Equinix in the tech sector.

"We look at the world and see that there's still incredible innovation going on," he says. "We look at businesses that are leading that innovation."