TECH FUND WANNABES STAMPEDE TO THE POST: RECORD HIGHS? THEY BELIEVE YOU AINT SEEN NOTHIN YET

At least 10 mutual fund companies are rushing to the starting gate with new funds before yearend while a handful of others have opened in recent weeks.

Companies are trying to seize the moment. Indeed, before Friday’s 267-point market dive, interest in tech stocks was running high. The Nasdaq hit a record of 2915 only last Monday before closing the week at 2731.83. But these funds could end up buying near the peak of the market and leaving investors with nowhere to go but down.

Tech managers pooh-pooh such concerns, saying that any time is the right time to get into the sector.

“Even funds that get started at the height of the market can do well in the next 10 years,” says Alex Cheung, manager of Monument Funds’ $60 million Internet portfolio in Bethesda, Md. His fund is almost a year old and half of the half-dozen funds focused on Internet stocks already boast three-year track records.

“For the first crop of Internet funds that have started out in the past three years, they have the first oeuvre advantage, and the visibility,” says Mr. Cheung.

Getting to the party early may be important from a marketing point of view, says Mr. Cheung. From a portfolio perspective, though, it most likely won’t matter much, even if technology stocks climb higher. As computer technology permeates more of the economy, its reach will create additional stocks for new funds.

Most of the companies offering funds in the parade to the Internet post are

houses that lack strong reputations. Several managers with funds in registration declined to comment, citing the Securities and Exchange Commission-mandated quiet period.

Ellen McKay, principal of the Optima Group, a Fairfield, Conn., mutual fund consultant, says most of her firm’s clients– larger institutions with asset management arms–hardly feel pressured to introduce their own Internet funds.

“I suspect that a lot of these highly specialized funds will not be around in a year or two,” she says.

Without a doubt, smaller firms like Munder Capital Management of Birmingham, Mich., and Kinetics Asset Management of North Babylon, N.Y., have made a name for themselves with their high-profile NetNet and Internet funds, respectively.

“Now, when I think of Munder, I think of just the NetNet fund,” Ms. McKay says. Still, larger firms feel there’s plenty of time to get into the game once smaller money managers prove the strategy successful.

While some worry that the new funds will be buying stocks at their peak, managers of existing tech funds say they’re glad they’re up and running now, before prices for Internet issues really explode.

“Psychologically [the timing] may make a difference,” says Barry Glasgow, portfolio manager of the soon-to-be-launched LCM Internet Growth Fund, the first closed-end Internet fund, which plans to start trading in a few days. “Some people may get nervous, thinking, ‘Oh the market’s going up.’ ”

Once Y2K fades into the background, those technology stocks may soar even higher, says James Grefenstette, a senior portfolio manager with Federated Investors. He thinks that despite current levels, an element of fear is depressing prices.

“The cloud is going to be gone,” says Mr. Grefenstette, who has a sizable play in software firms and runs the new $30 million Federated Communication and Technology fund.

He says he expects big buyers to move back into names after the beginning of the year. And that could help players like him, who will be out in the market buying.

“We want to be there marketing the product on New Year’s,” he says. “When it hits Year 2000, it’s not going to be a new product.”

That’s a problem facing Internet fund wunderkind Ryan Jacob, who struck out on his own this summer. His new cyberfund has been delayed by an SEC fund registration backlog and would-be investors worry that it could end up costing him.

Mr. Jacob was the subject of a discussion group on the website fundalarm.com. Participants lamented that he missed out on buying opportunities during the September swoon in the tech market. Mr. Jacob did not return calls seeking comment.