FUNDS
Depending on your disposition, we're either wildly careening toward or mildly cavorting with the Year 2000 problem. Regardless of your inclination, Y2K has become like almost every phenom in this millennium's twilight - a financial diversion, a global casino game, if not a safe investment. Along with institutional derivative exotica and David Bowie's royalty-tied bonds, Y2K is now one of the world's wagerable wonders.
And you, too, dear bit player, can place your millennial bets, in this case through the HomeState Group's Y2K Fund (HSYTX). For a $500 minimum investment, you can buy into a fund that invests at least 65 percent of its total assets in companies that could solve the Y2K problem. The other 35 percent is used to short vulnerable companies or is wagered on outfits that have a good chance of surviving the bug.
For many businesses, the digits "00" have come to mean "uh oh," and if the first Y2K lawsuit settlement is any indication, odds are against software suppliers. Last spring, Produce Palace International was awarded $250,000 when TEC America's cash-register credit card verification systems died after being bitten by the millennium bug. Will we see more such lawsuits? "Oh yeah," says Bill Burnham, ecommerce analyst for Credit Suisse First Boston. "We could even see chain-reaction lawsuits that keep lawyers working until 3000."
Y2K havoc is music to the ears of the fund's strategists. However, first they'll have to survive until 2000, and even with the ability to hedge through options and short-selling, their ability to beat the odds is no sure thing. In the period from November 1997 through September 1998, the fund was down 10.8 percent. And in 1998's volatile third quarter, it was down more than 26 percent.
So is the fund mere speculation? "It's always a tough call when you're betting on people's livelihood," says Burnham. "This would've been a good idea five years ago." His tone suggests caution to those ready to give the fund a whirl. On the other hand, perhaps its fortunes will ride the wave of anticipation as 2000 approaches. So do a little research, consult your deity of choice, and spin the wheel if you dare - just pray, as the century turns, that your ball doesn't land in the red.
Y2K Fund: www.y2kfund.com/.
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