Some small caps to wear cautiously

If you have not yet bought into the most red hot of small-cap funds, you're late!

You may also be wise.

Funds that invest in Internet companies have switched on the afterburners. The Munder Net Net Fund (800-438-5789) is up 67 percent for the year; the Internet Fund (888-386-3999) is up 35 percent; and the WWW Internet Fund (606-263-2204) is up 29 percent.

But before you race to sign up, be cautious, says Morningstar analyst Jon Hale.

Mr. Hale covers technology funds and says having a small portion of your assets in Internet issues makes some sense, particularly if you have a long investment horizon, say 25 years. But he calls Net stocks "highly speculative," based more on the promise than reality of the Net. Few Internet companies have actually turned a profit.

If you already own an aggressive growth fund, it may hold some Net stocks. If you don't own such a fund, he says, you might consider it for 10 to 15 percent of your assets. An Internet fund, he adds, should be considered part of that 10 to 15 percent.