What is there to say about love beads, Peter Frampton, Michael Dukakis and Net mutual funds, except that they came, we tried them and now they seem just plain embarrassing.
The latest Net fund failure is the Strong Internet fund, which conceded defeat this week and announced it will take refuge in Strong's Technology 100 fund. The fund's Net nature boosted its curiosity factor among reporters, and though coverage was widespread, analysis wasn't. Uber-analysis firm Morningstar was quoted everywhere. Stock fund analyst Paul Herbert commented on the funds' faddish nature to the Milwaukee Journal Sentinel, Strong's hometown newspaper, then was found echoing the same ideas in his own piece on Morningstar. That must be what they mean by convergence.
Because relatively few people had heard of the Strong fund, its demise became a chance for reporters to revisit the crash-and-burn of Merrill Lynch's Internet Strategies fund, coverage of which got lost in the media's weekend black hole after the firm announced last Friday that the fund would merge with Merrill's Global Technology Fund. While Strong Internet had attracted $96 million in assets at its peak, Merrill's fund had scarfed up a piggish $1.1 billion. The Wall Street Journal pointed out that the 13-month-old fund had the dubious distinction of having launched one month after the market peaked. Only two weeks ago, Morningstar had pegged it as one of 10 funds to avoid ("even those few who still want an Internet-focused fund can do better").
Having left their investors with a tin cup's worth of assets, many funds now find themselves equally bereft, Reuters noted. "Then there's the embarrassment factor, which was probably a big part of what led Merrill and Strong to kill off their funds," Russel Kinnel, Morningstar's director of fund analysis, told the wire service. How bad is it? By now, some red-faced Internet funds have less than $100,000 in assets, Reuters quoted Ramy Shaalan of fund researcher Wiesenberger/Thomson Financial as saying. $100,000? Why bother? Better to close up shop, throw on the beads and cue up a Frampton LP.
Another Net Fund Folds (Reuters)
CNNfn
Another Fund With 'Internet' in Its Name Is Going Away
TheStreet.com
Strong Aims to End Internet Fund
Milwaukee Journal Sentinel
Another Net Fund Heads for Oblivion
Morningstar
Dot-Com Dead Pool for Funds
Morningstar
10 Stocks and 10 Funds to Avoid (Morningstar)
CNBC.com
Strong Capital Joins Growing List of Firms Abandoning Web Funds
Wall Street Journal (Paid subscription required.)
Merrill Internet Fund Logs Off After Dim Life
Wall Street Journal (Paid subscription required.)
