High-Tech Fever

Two funds lure $835 million

Now that investors are feeling decidedly bullish about high-tech stocks, Merrill Lynch, characteristically, is thundering to the head of the stampede. Last week the firm announced it had collected $835 million from investors for shares in its new twin mutual funds called Sci/Tech. Sci/Tech Holdings, Inc., for U.S. and Canadian investors, raised $550 million, while Sci/Tech, S.A., for overseas investors, attracted $285 million. The offering turned out to be the largest mutual fund start-up ever, leagues ahead of the second largest, Manhattan Fund, launched in 1966 with $247 million. The Sci/Tech funds, which will have nearly identical portfolios, will buy stock in companies around the world in such fields as biotechnology, health care, computers, communications, electronics and automation.

Besides being the biggest of the 30-odd mutual funds concentrating on science and technology stocks, Sci/Tech boasts a prestigious international management team. Under Merrill Lynch's direction, assets in Japan and the Pacific Basin will be managed by Nomura Capital Management, Inc., an affiliate of Japan's largest securities firm, Nomura Securities Co., Ltd. West European investments will be handled by Lombard Odier International Portfolio Management Ltd., a London-based subsidiary of one of Switzerland's oldest and largest private banks. Merrill Lynch Asset Management, already the biggest U.S. manager of mutual funds, will handle Sci/Tech assets in the U.S., Canada and, later, South America.

Advising Sci/Tech's investment specialists will be a council of scientists and other experts in fields ranging from biology to aeronautical engineering. Harry Woolf, who will head the council, is director of the Institute for Advanced Study in Princeton, N.J. Says Arthur Zeikel, president of Merrill Lynch Asset Management as well as Sci/Tech: "Our international scope, professional management and scientific advisory council will put Sci/Tech on the cutting edge of the rapid changes in science and technology around the globe."

But other market experts, including Morgan Stanley's chief portfolio strategist, Barton Biggs, have been warning that many high-tech issues are overrated. Some are selling at prices as high as 50 times their earnings; the average price for the 500 stocks in Standard & Poor's Index is about 13 times earnings. Says Zeikel: "It's true that some high-tech stocks have gotten ahead of themselves." But he argues that the overall high-tech trend is up and that the funds will ride up with it.

Even if they do not, Merrill Lynch is already a winner. Commissions of up to 8.5% on the sale of the domestic shares alone should have netted the company about $20 million. This file is automatically generated by a robot program, so viewer discretion is required.