Are clone funds bad? Tom Lauricella at the Wall Street Journal takes on the issue in his latest Fund Track column and provides no final answer to the question. He does, though, warn investors to be skeptical and points out that "clones don't necessarily benefit investors, but, rather, give fund-management firms a way to earn more in fees," according to critics.

The heart of the article is a tour of examples of fund clones.

First stop on the tour is Julius Baer Investment Management, which recently closed Julius Baer International Equity Fund and simultaneously opened a clone version II. This action may have been the inspiration for the column (it did inspire a similar Morningstar piece earlier this week).

Second stop is American Century Small Cap Value fund and its clone. Interestingly, the original fund closed way back in November 2001 and its clone did not debut until May 1, 2002. Also different in that case is that the clone -- ING Partners American Century Small Cap Value Fund -- is a subadvised portfolio for another distributor.

Lauricella then segues into an example set by T. Rowe Price Group when that fund advisor chose to close its clone the same time it closed the original (Mid-Cap Growth was the original and a MassMutual fund was the clone).

"We don't allow someone to cherry-pick a strategy that is closed," George Riedel, vice president of third-party distribution at T. Rowe Price, explained to Lauricella. "We have to maintain the spirit of why a portfolio manager shuts the door."

Other funds making an appearance in the article include: Hartford Financial Capital Appreciation Fund (and II), and Fidelity Contrafund I (and II, now Discovery).  

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