Fidelity, Vanguard Pass on Internet-Only Funds

Fidelity Investments and Vanguard Group, the two biggest U.S. mutual fund companies, said they have no plans to launch funds that invest exclusively in Internet stocks.

“We’re reluctant to contribute to the speculative fever in these stocks” by opening an Internet fund that could quickly attract several billion dollars from investors, said Robert Pozen, who oversees Fidelity’s mutual funds unit.

The Interactive Week index of 50 Internet-related stocks such as America Online Inc. and Amazon.com Inc. is up 200% in the last 52 weeks, with some companies’ prices rising beyond levels justified by their earnings potential, analysts said Wednesday.

“When you see leading fund companies, like Fidelity and Vanguard, opting against jumping into this hot sector, it’s a cautionary note for the stocks,” said Amy Arnott, a Morningstar Inc. analyst.

Vanguard spokesman John Demming said the company’s funds are “designed for long-term investors, and Internet funds tend to be used more for speculative purposes.”

At least four funds concentrate on Internet stocks, including the $2.5-billion Munder Net Net Fund and the $720-million Internet Fund, according to Morningstar. Others are the $48-million Monument Internet Fund and the $30-million WWW Internet Fund.

Internet Fund and Monument Internet Fund are the top-performing funds in the nation this year, up 122% and 117% respectively through Tuesday, according to Bloomberg Fund Performance.