The top three technology mutual funds during the past three months--Waddell & Reed Advisors Science and Technology, WWW Global Internet and Credit Suisse Global New Technology--maintained portfolios in which technology stocks represented less than 65 percent of all holdings. All three lost value, but the loss was far less than other tech funds.
"The best performers tended to avoid pure tech stocks and held onto cash or bond stakes," said Christopher Traulsen, a tech analyst with mutual fund tracking firm Morningstar, which compiled the statistics.
Despite its name, WWW Global Internet fund did not directly own any Internet stocks. The fund, which had assets of about $300,000 at the start of the quarter, held its technology stocks through indexes such as the Nasdaq 100 Trust, which accounted for 10.7 percent of its portfolio.
"That tiny fund owns a lot of food and beverage stocks and has a huge cash stake," Traulsen said. "They own stocks like GE, Exxon Mobil and Home Depot."
WWW Global Internet was the second-best performer, with a 10.33 percent loss in the quarter. The best performer, Waddell & Reed, posted a 9.45 percent decline and Credit Suisse Global New Technology an 11.78 percent loss.
Another bad quarter
Even the best tech mutual funds posted losses in the third quarter (percent change shown from June 30 to Sept. 30).
Waddell & Reed Advisors Science and Technology Fund
-9.45% WWW Global Internet
-10.33% Credit Suisse Global New Technology
-11.78% Monterey Murphy New World Technology
-12.91% Kinetics Internet Emerging Growth
-12.99% Bottom five ProFunds Ultra Semiconductor
-49.31% Black Oak Emerging Technology
-42.14% Berkshire Focus
-41.54% Fidelity Advisor Electronics
-41.29% Berkshire Technology
In the case of Waddell & Reed, which has $1.8 billion in assets, Traulsen said its large stake in the healthcare industry--39.2 percent as of March 31--helped shield it from greater losses. He added the fund's 16 percent stake in bonds also contributed to Waddell & Reed's performance. Technology stocks accounted for 23.1 percent of the portfolio.
ProFunds Ultra Semiconductor, with $4 million in assets, posted the worst results with a 49.3 percent decline.
"The chips were really hit hard in the quarter. Most of the chip-heavy funds were among the bottom performers," Traulsen said.
ProFunds was hurt by its sizable stake in Intel. Shares in the chip giant, which represented 24 percent of the fund's portfolio, fell 20.8 percent in the quarter.