Though experts warn against investing in mutual funds geared to Internet stocks, such funds are popping up left and right because of investor demand.

Last week, ING Group's mutual fund arm launched the ING Internet Fund. And on July 1, Enterprise Group of Funds rolled out the Enterprise Internet Fund.

Those funds join at least four Internet funds already in place, and seven more are being registered with the Securities and Exchange Commission.

"I think people just want a piece of the action," said Christine Benz, domestic equity funds editor for Morningstar Inc., the fund-rating business in Chicago. "It's an easy way to get a slice of Internet stocks."

It's easy to see why funds that invest in Internet-related stocks are popular: The returns have been stellar and, in some cases, almost surreal. Kinetics Asset Management's Internet Fund had a 12-month return of 346% through the end of May. Munder Capital Management's NetNet Fund shot up 129% over the same period.

But critics of such funds say they can fall as precipitously as they rise. Investors have gotten a glimpse of that risk lately-the mighty Kinetics fund lost 11.3% in May. Monument Fund Group's Monument Internet Fund lost 17.9% during the month.

Such volatility is the reason that the biggest fund companies have balked at creating Net funds. They worry that the funds will become magnets for market timers, who will take their money and run when the funds' performance begins to head south, Ms. Benz said.

"They're worried about the headaches of cash flows in and out of these things," she said. "Should the market for Internet stocks go down, big fund managers will be faced with lots of redemptions, and that would hurt returns for people who do stay in the fund."

Ms. Benz and others warn that Net funds' holdings just aren't diverse enough to cushion against trouble in the narrow sector.

"Even though there are all sorts of Internet companies, from content providers to infrastructure providers, so far the stocks have tended to act a lot alike," Ms. Benz said.

But such warnings have done nothing to slow the influx of money into Net funds.

Kinetics' Internet Fund, for example, had its assets under management soar to $748 million at the end of May from about $25 million at the end of 1998.

It does not seem that bank brokerages are selling many shares of Internet funds, perhaps because bank investors tend to be more conservative. "We have not had any request from our salespeople for them," said Deborah Bernot, the president of Cal Fed Investments, Sacramento, Calif. "I guess we do have a fairly conservative customer group, so that's why."

And most banks get their mutual funds from a few of the biggest companies out there, such as Putnam Investments, Franklin Templeton Group, and AIM Management Group.

Those companies have yet to introduce Net funds. At the Investment Company Institute's annual conference in May, a top Fidelity Investments executive said the company had been "inundated with requests to have an Internet-only fund."

But Robert Pozen, the president of the company's asset management arm, said such a fund would not be a good investment for the company's clients over the long term. "There's clearly something of a speculation going on in Internet stocks, and we don't want to fuel that," he said.

Of course, investors can buy them through the discount brokerage area of banks.

As long as Internet mutual fund shares perform, Ms. Benz said, they will have plenty of takers.

"As ridiculous as the valuations on these stocks are, the Internet has made its way into all our lives," she said. "No one can deny that some of these companies will have real staying power."

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