Many mutual funds becoming technology heavy

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Do you know what you're investing in? The answer may startle you.|ret||ret||tab|

Of course, you do have some idea of where your investment dollars are going. For example, you may have bought some technology stocks, which have clearly dominated the marketplace recently. |ret||ret||tab|

There are numerous promising opportunities in this area, including companies that specialize in the Internet, wireless and cable communications, and so-called broadband communications the technology that allows voice and data to be delivered simultaneously.|ret||ret||tab|

When you buy these types of companies, you're obviously hoping that your investment will grow significantly. However, you need to be aware that, in exchange for these growth prospects, you are also accepting a relatively high degree of investment risk a point that was made quite clear in recent months when the technology-heavy NASDAQ Composite Index went through some enormous ups and downs.|ret||ret||tab|

There's nothing wrong with investing in these technology stocks as long as that's what you have in mind. But you don't want to become an inadvertent investor. You might be surprised, for example, at how many technology holdings you have in your mutual funds. |ret||ret||tab|

The average stock fund manager has raised his or her fund's technology allocation from just 2.6 percent in 1991 to 24.3 percent in 1999, according to Morningstar, a well-known mutual fund rating agency. |ret||ret||tab|

Part of the reason for this jump is that mutual fund managers are judged by their performance and lately, virtually all the big performance numbers have come from technology stocks. But, when these stocks decline, they often fall longer and harder than the overall market.|ret||ret||tab|

Fund managers aren't trying to hide these increases in technology holdings in fact, this information is readily available in the semiannual and annual reports you receive from your mutual fund companies. But if you pay particularly close attention to the holdings section of these reports, you might be surprised at the story they're telling.|ret||ret||tab|

If you do find out that your mutual funds have taken on a heavy weighting in technology, what should you do? The answer depends totally on your individual preferences, your risk tolerance and your time horizon. If you plan on investing for many more years, and you don't mind assuming some short-term risk in exchange for potential long-term returns, then you may decide to leave your fund as it is, assuming you are still satisfied with the fund manager's investment philosophy.|ret||ret||tab|

On the other hand, if you think you will be needing the money in the near future, and you are uncomfortable with the level of investment risk posed by a technology-heavy fund, then you may want to make some changes.|ret||ret||tab|

Under any circumstances, though, it's always a good idea to periodically review your mutual fund portfolio with your investment representative and rebalance it to meet your needs. |ret||ret||tab|

(Betty J. Neal, CFP, is an investment representative with Edward Jones in Springfield.) |ret||ret||tab|

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