Seven New Fund Ideas We Hope Not to See

With thousands of mutual funds already crowding the landscape, it's tougher than ever to come up with worthwhile ideas for new ones. That, however, doesn't stop the intrepid marketers at some fund shops. Last month, for example, The New York Times noted that HSBC Asset Management has just created an innovative emerging-markets fund. Rather than focusing on all emerging markets, or those in a particular region, this offering targets just the four countries that Goldman Sachs calls the BRICs: Brazil, Russia, India, and China. (The fund is not available in the United States, but may be at some point.)

In the article, an emerging-markets manager from a different firm dismisses the idea, arguing that there's no reasonable justification for a fund to focus on those countries and exclude the rest. He's got a point--but the fact that an idea makes little sense won't necessarily prevent a fund firm from promoting it. Remember the AIM fund that invested in only European countries that had adopted the euro? In fact, because it seems futile to try to cure the industry of the wacky-fund habit, I've decided to join in and come up with some ideas of my own. For example, maybe HSBC should take the idea one step further by creating a sibling fund that includes Argentina rather than India. Then they could sell BRIC-and-BRAC.

And why stop there? I've got lots of other creative ideas for fund companies looking to expand their menus. Some of the possibilities below are designed with specific firms in mind, while others are available to any firm inclined to give them a shot. To be even more helpful, I've included for each idea a marketing summary that a company can use to persuade you to put common sense aside and sink some money into this fund.

1. The "Whatever" Fund
Designed to introduce teenagers and young adults to investing using a style they can understand, this fund will meander from strategy to strategy with no real plan or purpose. Most likely, it will flounder for a while before suddenly getting excited about a certain area and pouring all its money into it. A few months later it will decide those stocks are worthless, sell them all, and put 100% of the proceeds into another really cool sector. On occasion, the fund may lose interest entirely and let all its money sit in cash. During those periods, the manager will spend time playing video games and sending instant messages to friends.

2. Fidelity Select Hamburgers
In its Select line, Fidelity already offers investors a wide variety of options that target specific industries ranging from leisure to paper products to natural gas. Until now, though, one crucial sector has been missing: hamburgers. This fund will own shares in  McDonald's (MCD) and a small number of rival hamburger chains. It will adjust its portfolio weightings based on a proprietary model that takes into account monthly climate changes, the number of children entering preschool, and the price of tiny bits of soggy lettuce. All new investors get a free Happy Meal and an action figure of the Hamburglar.

3. Vanguard Negative Expense Ratio
The manager, strategy, and other details of this fund have yet to be determined. But one thing's for sure: It will have the lowest darn expense ratio on the planet! Check that: It'll have no expense ratio. No, wait: The expense ratio will be negative. Yeah, that's it! We'll pay you to own this fund! Ha! Take that, Fidelity!

4. The Kremlin Fund
Existing Russia funds face a serious risk: At any moment, the share price of one of their top holdings could collapse without warning, solely because--as happened with oil giant Yukos--the Russian government suddenly decides to throw the CEO in jail and auction off the company's assets. To address that problem, this fund will adopt a two-pronged strategy. First, its manager will use traditional analysis to come up with a list of attractive stocks for the portfolio. Then, that list will quietly be handed to a Moscow middleman known as "Raven." He will pass it on to a Kremlin insider, who will return it a few days later. The fund will avoid investing in any company that has been crossed out with a big black "X" or marked with a skull and crossbones.

5. The Red-State Fund
Now you can put your money where your favorite party gets its strongest support--and avoid sending it anywhere else. This fund will only invest in those states that voted Republican in the 2004 presidential election. It will pay special attention to Texas. It will not, under any circumstances, invest in France.

6. The Blue-State Fund
For loyalists of the other side: This fund will only invest in those states that voted Democratic in the 2004 presidential election. It will not invest in  Halliburton (HAL). It will not advertise on Fox News.

And finally...

7. Munder NetNetNetNet
Twice as good as  Munder NetNet (MNNAX).