From the WSJ
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E-Harmon.com Plans to Launch
Internet Fund Over Cyberspace
By PUI-WING TAM
Staff Reporter of THE WALL STREET JOURNAL
In another intersection of the Internet and the mutual-fund industry, which has been slower to embrace the Web than many industries, Internet columnist Steve Harmon and his financial Web site e-harmon.com are launching an Internet fund over cyberspace Monday.
During a subscription period that will last for the next three weeks, e-harmon Internet Fund will be available without a fee to customers who invest directly by phone or through the Web site (www.e-harmon.com), said Mr. Harmon, a former Internet analyst who now writes a daily Web column that reaches 300,000 to 400,000 readers.
The new fund, which will be co-managed by former Barclays Global Investors manager Lisa Cavallari, will invest in Internet-related stocks world-wide and can also invest as much as 15% of assets in private equity deals.
It wouldn't seem to be the best time to launch a fund specializing in Internet shares, given the recent market turbulence that has been especially painful for many Web-related stocks. With the technology-heavy Nasdaq Composite Index down more than 35% from its March peak just two weeks ago, some jittery investors may have been spooked away from the Internet investment arena.
But Mr. Harmon said volatility isn't unusual for the Internet sector and argued that market turbulence is nothing to be afraid of. He added that he plans to take a three-to-five year view on the holdings in the fund.
The e-harmon fund is the latest in a string of new portfolios launched by an emerging breed of Internet-related financial firms. Over the past year, brand-new financial companies such as X.com and StockJungle.com have set up Web storefronts and used the cyberspace platforms to set up and sell mutual funds to the public. The young firms have brashly sidestepped some of the established fund industry's conventional practices -- for instance, X.com launched a Standard & Poor's 500-stock index fund that doesn't charge any load or management fees -- in order to quickly attract investors.
Mr. Harmon, who already does some venture-capital investing, said he wants to leverage off his newsletter, NetStock, and launch a mutual fund as "a favor to loyal Web-site customers" who have been clamoring for an investment vehicle.
To beef up the fund's Internet appeal, the portfolio will be introduced to potential customers via an eight-minute video and audio roadshow conducted entirely on the Web.
But Russ Kinnel, an analyst at fund tracker Morningstar Inc., said e-harmon Internet Fund will have to work hard to break through to investors. Though Mr. Harmon may have cut a swathe through the cognoscenti of Silicon Valley, he hasn't managed a mutual fund before. And while there were just two Internet funds available to the public two years ago, the number has now sprouted to more than a dozen, with some of the new portfolios backed by heavyweight firms such as Goldman Sachs Group.
The new fund will be made available through mutual-fund "supermarkets" such as Charles Schwab Corp. after the portfolio's initial three-week subscription period. The fund will also launch a loadshare class, under which investors will be charged a 5.75% front-end load when purchasing shares in the fund.
Mr. Harmon has another mutual fund in the pipeline. He has filed to launch e-harmon Net30 Index Fund, a portfolio that will follow an index of the top 30 Internet companies as ranked by total revenues. The fund is expected to be available to the public later this year.
Write to Pui-Wing Tam at pui-wing.tam@wsj.com |
