Fund Managers With Tech Savvy Finding New Jobs.

LIKE the stocks they invest in, quite a few mutual fund managers with Internet expertise are on the move these days.

A half-dozen or more managers of top-performing Internet-related and aggressive growth funds have left their jobs in the early weeks of 2000 to start their own firms, join hedge funds or jump to other talent-hungry fund companies.

It's only logical that this would happen. But every time it does, investors in the funds involved have some choices to make.

Alexander Cheung, who racked up a 273 percent return running the Monument Internet Fund in 1999, departed in late March to start Long Bow Capital Management. Aaron Harris moved from the Nicholas-Applegate Global Technology Fund to Nationwide Financial Services' Villanova Capital.

Fidelity Management & Research Co., the biggest of all fund firms with $892 billion in assets, has lost analysts who ran three of its high-tech sector funds, as well as Erin Sullivan, 29-year-old manager of the Fidelity Aggressive Growth Fund.

Sullivan left in mid-February to start a hedge fund, a type of investment partnership aimed at wealthy individuals and institutions that isn't so tightly regulated and often pays its managers lavishly.

"While we don't like to see a talented manager like Erin leave," said Bob Pozen, president of Fidelity Management & Research, "we do have a deep bench. The people who left were just a few of our 60 or 70 managers and 200 analysts."

Since Robert Bertelson, previously manager of the Fidelity OTC Portfolio, succeeded Sullivan in mid-February, Aggressive Growth's assets have grown from about $17 billion to about $22 billion, Pozen said.

"After Erin left I thought we'd have a big change in sales and redemptions at the fund, but we didn't," Pozen said in an interview.

Experience in the great bull market has taught many fund investors to bide their time when a manager leaves, rather than rushing to move their money elsewhere.

Although each case is different, it paid to stick around after some celebrated changes of the late 1990s. For instance, after Scott Schoelzel took over for Tom Marsico at the Janus Twenty Fund in 1997, Janus Twenty gained 73 percent in 1998 and 65 percent in 1999, beating the Standard & Poor's 50 Index by more than 40 percentage points in both years.

"Make no mistake, Erin Sullivan's departure is a blow to Fidelity Aggressive Growth," said Emily Hall, an analyst who follows the fund for Morningstar Inc. in Chicago. Still, she said, "shareholders probably shouldn't be bailing out simply because Sullivan is leaving, although the transition certainly bears watching."

Given the hyperactive state of both the new-age economy and the stock market, there's nothing startling about the recent job changes in funds. "Despite competitive pressures, Fidelity has done an admirable job at retaining its valued employees," says Eric Kobren in his independent newsletter Fidelity Insight.

Even so, there has been some grumbling lately about changes of command at Fidelity's funds, particularly when a departure prompts a shuffle among several other managers. "To the extent we can, we try to have people stay on the same fund," Pozen says. "A lot of it depends on whether the fund attracts assets."

For example, he said, Will Danoff has managed the $48 billion Fidelity Contrafund since 1990, when its assets were less than $1 billion. Other times, he said, it makes sense to promote promising managers from small funds to bigger ones. "We clearly don't want to take new managers and put them on a $30 billion fund," he said.

Pozen said dot-com competition hits Fidelity hardest in its recruiting of new employees. On trips to business schools, he says, "there just isn't the clamor there used to be" among students to see Fidelity recruiters.

But he says the pressure may be starting to ease as the romance of the Internet gives way to the tests of the real world.

"I think that's actually changing a lot," he says. "There are good companies and there are companies that aren't going to make it."

Chet Currier is a columnist for Bloomberg News.

'Cap' Size Is No Sure Performance Indicator

You can burn a lot of energy nowadays weighing the pros and cons of the different categories ranked by capitalization, or total market value of the typical stock owned by a fund -- large-cap, mid-cap, small-cap and micro-cap. But over the last five years, picking one over another made very little difference.

Even if it turns out to matter more in the future, there's no reliable way to choose in advance which one will fare best. You may be better off spreading your money across the cap-size range, or buying "all-cap" funds, and being done with the subject.

Without question, the different size classifications can produce significantly different results in any given year. Take 1999, when Morningstar Inc.'s average of growth funds investing in mid-cap stocks -- or those in the middle range of total market values -- soared 64 percent. Small-cap growth came right behind with a 63 percent gain, while large-cap growth "settled" for a 39 percent rise.

But mid- and small-cap funds were just making up some ground they lost to large-cap funds in preceding years. Over the last five years, the three categories of growth funds rank this way: mid-cap, up an average of 30 percent a year; large-cap, up 28 percent; and small-cap, up 27 percent.

Every size has its plausible sales pitch. But to believe that one size category holds more long-term attraction than the others presumes that the whole world of modern investors still hasn't grasped its potential, and is "mis-pricing" it.