(September 29) – “Beginning today, investors will be able to tie their money to picks made in part by one of the most influential Wall Street analysts following the Internet,” writes Banny Hakim in today’s New York Times.

“Morgan Stanley Dean Witter is introducing an investment fund that will track the Morgan Stanley Internet index, whose 29 stocks are chosen by Mary Meeker and other analysts at Morgan Stanley.”

“Ms. Meeker has been called Queen of the Net by Barron’s and was the subject of a long profile in The New Yorker last year. Her firm was the lead underwriter for such pioneering initial public offerings as Netscape.”

“Now Morgan Stanley is using Ms. Meeker to promote its new Internet fund — she is scheduled to appear at a news conference today promoting the product, which will be the first investment fund for retail investors that has a tie to her research.”

“This year, of course, being Queen of the Net is not the most exalted perch. Internet stocks took a drubbing in April and have yet to recover. Since its introduction on March 24, the Morgan Internet index has fallen 48.4 percent. Ms. Meeker declined to comment, and Morgan officials refused to speak on the record. But they say that the index is a better gauge of the Internet industry compared with the dozens of other Internet indexes that have preceded them.”

“Ironically, as the market for Internet stocks has slumped this year, Internet stock indexes continue to proliferate, as do investment funds created to buy only Internet stocks. Because of regulatory bureaucracy and the investment industry’s sometimes sluggish pace, new funds created to invest in hot market trends often arrive just in time to find that the hot investment trend has grown ice cold.”

“Two years ago, three mutual funds invested exclusively in Internet stocks. Today, there are more than 40 of various types.”

” ‘Is there room for more? My inclination is probably not,’ said Donald Cassidy, senior research analyst at the fund tracking firm Lipper. ‘The Morgan Stanley name will help. The fact that she’d talk it up will help. But, gee, this isn’t the first one.’ “

“The StreetTracks Morgan Stanley Internet Index Fund, as the new fund is called, is an exchange-traded fund, a mutual-fund-like product that trades like a stock. The index is run in conjunction with the American Stock Exchange, which uses Morgan Stanley’s research and its lists of recommended stocks to compile and alter the index, in which each stock is rebalanced with an equal weighting every quarter. The fund will be run by State Street Global Advisers, an investment firm in Boston that is introducing six other exchange-traded funds today. The Internet fund will have a 0.50 percent expense ratio — the annual fee deducted in daily increments from mutual and exchange-traded funds.”