Monument Group Inc. is selling its mutual fund lineup to Orbitex Management Inc. for an undisclosed sum, InvestorForce.com reported Monday, as the shakeout of the Internet stock crash continues to ripple through the fund industry.
The stock market's plunge over the last year made continuing operations "increasingly difficult" for Monument, the Bethesda, Md.-based company said in a regulatory filing, according to InvestorForce, a site that reports on fund industry trends.
Officials at Monument and at New York-based Orbitex, which Monument hired in May as sub-advisor to its Monument Digital Technology, Medical Science and Telecommunications funds, could not be reached for comment Monday.
Smaller fund firms such as Monument, Kinetics Asset Management, Munder Capital Management, WWW Advisors and Jacob Asset Management all sought to capitalize on the Internet stock craze by rolling out Net-oriented funds in the mid- to late 1990s.
Assets at those five fund shops fell by 62% from the end of the first quarter of 2000 to the end of this year's first quarter, according to Financial Research Corp.
At privately held Monument, assets shrank to $78.4 million from $436.3 million in that span, Financial Research said.
"For investors, the Monument story speaks to the danger of chasing hot trends," said Morningstar analyst Christopher Traulsen. "A lot of these smaller companies went after the Internet sector trying to attract assets rather than thinking about whether it made sense as a good, solid long-term investment. "
Since Net stocks began tumbling early in 2000, many Internet funds have been liquidated, merged into broader technology funds or changed their names and charters to get away from the dot-com stigma.
DeLeon Internet 100, Zero Gravity Internet, StockJungle.com Pure Play Internet and Internet Index Fund are among those that have been liquidated, according to Morningstar.
Mergers now in progress include Merrill Lynch Internet Strategies, which is being combined with Merrill Lynch Global Technology, and Strong Internet, which is being folded into Strong Technology 100.
Renamed funds include Monument Digital Technology, known as Monument Internet in its heyday; Westcott Technology, formerly Westcott Nothing But Net; and STI Classic Information & Technology, formerly STI Classic E-Commerce Opportunity.
Monument plans to merge its funds into the Orbitex roster, InvestorForce said. If shareholders approve, Monument Telecommunications will be folded into the Orbitex Info-Tech & Communications fund, Monument Digital will be renamed Orbitex Emerging Technology and Monument Medical Sciences will become Orbitex Healthcare.
Traulsen noted that Orbitex manages a broad variety of sector funds, including a financial services fund and an energy and basic materials fund, whereas Monument has had a heavy tech focus.
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Assets have fallen sharply at mutual fund companies that sprouted up or branched out in the late 1990s to offer Internet specialty funds. A sampling:
Month-end assets (in millions)
Fund complex 3/31/00 3/31/01 Munder Capital Management $17,614.8 $7,043.0 Kinetics Asset Management 1,574.2 433.4 Monument Advisors 436.3 78.4 Jacob Asset Management 229.2 22.9 WWW Advisors 126.8 24.4 5-company total 19,981.3 7,602.1
Source: Financial Research Corp.