Morningstar has a warning to anyone thinking of investing in nanotech. Comparisons with biotech and internet bubbles are apt, though not entirely accurate and although the article claims that there are no nanotechnology mutual funds, there are two in Germany.
Along with a good sector overview, there is a sensible highlighting of two areas of concern. First is the warning that trying to pick out the long-term winners at this early stage is certainly a gamble and secondly the observation that all but one of the 25 stocks in the Merrill Lynch Nanotech Index have market caps under $1 billion, and half have market caps under $250 million, leading to the sort of volatility we have seen since the funds launch.
While professional investors are able to take an option on nanotech, retail investors would do well to heed the old warning, that “any money put into [nanotech] should be money you’re prepared to lose.” The managers of any risky fund will tell you exactly the same thing, whether nano or not.