With computer industry stocks leading the market's charge into record territory, investors are pouring millions of dollars into mutual funds holding technology shares, according to data gathered for Money magazine's Small Investor Index.
As companies and consumers snap up computers, software and related equipment, stocks such as Intel, Microsoft, Motorola and Hewlett-Packard have registered gains of 10 percent to 30 percent so far this year. To grab a piece of that bounty, small investors have flooded technology funds with $585 million in net fresh cash since March 1, according to AMG Data Services of Arcata, Calif.For example, the Fidelity Select Electronics fund took in $155 million of its $464 million in total assets in just the past six weeks. And the $1.2 billion T. Rowe Price Science and Technology fund has added $110 million over the same period.
Despite the sharp recent run-up, many money managers think that technology shares will keep climbing this year, even if the economy continues to slow. "The forces driving the computer market are largely independent from the general condition of the economy," says Garrett Van Wagoner, portfolio manager of the Govett Smaller Companies fund in San Francisco. "Profits will remain strong as new products, such as Microsoft's Windows '95 are introduced." Van Waggoner has 75 percent of the $170 million fund's assets invested in technology stocks.
Last week the Money Index, which tracks the typical investor's holdings, fell $151 to $52,154. Stocks lost $197, bonds returned $28. Certificates of deposit and money-market funds added $14, while gold rose $6.