A Stock Fund as Pure as Light
Internet Asset Management AG, a Zurich-based money manager specializing in technology funds, is putting together the PEH Fiber Optics fund.
It will include the leading networking and fiber-optic components makers as well as smaller companies focusing on cutting-edge optic technology.
"Because this market is changing so rapidly and new technology is coming almost weekly, I'm looking at the type of products we'll have as we move toward all-optical networks," says Mark Morris, president of Internet Asset Management.
The fund is still in registration and is scheduled to be available to investors in August. Morris has completed his first draft of the fund, and it contains many of the well-known names in the industry. His top three holdings currently include Ciena Corp. (Nasdaq: CIEN), MRV Communications (Nasdaq: MRVC) and SDL Inc. (Nasdaq: SDLI), each of which accounts for 8 percent of the model portfolio. Other large positions, each accounting for 3 percent of the preliminary portfolio, include Adept Technology Inc. (Nasdaq: ADTK), Alcatel SA (NYSE: ALA), Bookham Technology PLC (Nasdaq: BKHM), Corning Inc. (NYSE: GLW), Extreme Networks Inc. (Nasdaq: EXTR), JDSU Inc. (Nasdaq: JDSU), Newport Corp. (Nasdaq: NEWP), SDL Corp. (Nasdaq: SDLI), Sycamore Networks Inc. (Nasdaq: SCMR), and Vitesse Semiconductor Corp. (Nasdaq: VTSS).
Other stocks Morris is looking to put in the fund include Nortel Networks Inc. (NYSE, TSE: NT), ONI Systems Inc. (Nasdaq: ONIS) Inc., New Focus Inc. (Nasdaq: NUFO), and Redback Networks Inc. (Nasdaq: RBAK).
Morris launched his company five years ago, and it currently maintains the Irish Life International eFund. This fund focuses on Internet infrastrucure--the hardware and software that runs Internet systems rather than those who simply sell goods and services over the Internet. The eFund is up 80 percent since its launch on Oct. 1, 1999. As Morris describes it, he prefers to invest in "pure infrastructure." Over time, both the PEH Ideal Internet Fund and the eFund grew their positions in optical networking, to the point at which he decided it was time to start a pure optical networking fund.
Morris focuses on components and switching gear, and he will carefully watch companies playing with emerging technologies such as Micro-electro-mechanical systems (MEMS). But he thinks the most important optic investment plays may include manufacturing companies such as Adept and robotics and testing companies such as GSL Lumonics (Nasdaq: GSLI) and Keithley Instruments Inc. (NYSE: KEI), all of which enable the fiber optic companies to manufacture products. The fund will be administered and sold to investors by DG Bank.
--R. Scott Raynovich, excecutive editor,Light Reading http://www.lightreading.com