In fact, those tech funds which had entered, when the ICE stocks were touching stratosophic heights, have been the worst-hit. For instance, Alliance New Millenium, IL&FS eCom Fund and Prudential ICICI Tech have suffered a sharp erosion in their NAVs.

Nevertheless, the crash in NAVs of these technology funds has thrown open some attractive investment opportunities. Although initial investors are suffering a sharp depreciation in their investments, those investors who are convinced about the long-term potential of teh technology sector can take the plunge. Further, even existing investors in these funds can buy more, thus averaging out their initial cost of investment.

For instance, Alliance New Millennium is an aggressive fund. The fund had a initial NAV of Rs 15 and it has since fallen from a peak of Rs 18.45 to the current level of Rs 7.41 (52 per cent fall compared to the first NAV). More than half of its corpus is invested in five stocks (telecom and IT).

Although the fund is exposed to high volatility, the returns will also be high as software and telecom are the hot sectors of the economy. As on July 31, 2000, Alliance has 52 per cent of its corpus in Infosys Technology, HFCL, Global Telesystems, Satyam Computers and NIIT (in ascending order).

K-Tech could be yet another good investment option. Although the fund is sector-specific, the portfolio of the fund is decently spread out between IT, media, finance, pharmaceuticals and telecom. K Tech's NAV has fallen from an initial level of Rs 7.84 to an all-time low of Rs 6.9. The erosion in the intial corpus is 30.92 per cent. As on July 31, 2000, K-Tech has 63 per cent of its corpus in IT, 8 per cent in media, 7 per cent in finance (which includes HDFC Bank, ICIC Bank, etc), 3 per cent in pharmaceuticals (top holding Ranbaxy) and 3 per cent in telecom.

Besides software, KP Internet Opportunities Fund has invested in companies which are expanding their business operations through Internet. In other words, these companies are leveraging the internet to service their customers in a better manner, while also adding to their exiting client base. This will also provide some protection against volatility in IT stocks while giving high returns associated with the sector.

This is reflected in the fact that its initial corpus has fallen by only 25 per cent from Rs 555 crore to Rs 416 crore, which is the lowest compared to other sector-specific technology funds. As on July 31, 2000, KP Internet has 50 per cent of its corpus in top five holdings like Infosys Technologies, Satyam Computers, Hughes Software, NIIT and Wipro. Also, 16 per cent of its corpus is invested in stocks like HDFC Bank, HDFC Ltd, HLL, ICICI Bank, ICICI Ltd, M&M, Cadbury and Crisil. The non-conventional stocks in teh portfolio are geared to cushion the fall in NAV.