If Putnam Investments of Boston creates an Internet fund, a possibility furthered by the creation of a partnership with money manager Thomas H. Lee this summer, Internet funds would be well on their way to becoming mainstream.

Putnam and the Thomas H. Lee Co. of Boston, in July, created a partnership called TH Lee Putnam Capital through which the pair plans to develop alternative investments for institutions and high-net worth clients.

One of the first investments the partnership will create is a private-equity Internet fund. Putnam is considering the possibility of creating its own Internet fund if the partnership fund succeeds, according to a Putnam spokesperson.

It is uncertain whether Putnam envisions creating an Internet fund for its retail clients or whether it would create a product for the institutional marketplace. Putnam officials declined to elaborate on the idea. But, the fact that such a fund is being considered holds implications for the industry, which has yet to embrace Internet investments for retail mutual funds on a large scale.

If it were to create an Internet fund today, Putnam, with $244 billion in mutual fund assets, would be the largest mutual fund company to have its own Internet fund. Until now, Internet funds have been run by boutique firms like WWW Advisors, which runs the WWW Internet Fund of Lexington, Ky., and Kinetics Asset Management, which runs The Internet Fund of Babylon, N.Y. ING Funds of Philadelphia, Investec Guinness Flight of Pasadena, Calif. and Monument Funds of Bethesda, Md., run or are planning others.

But in July, Goldman Sachs of New York, which has one of the 50 largest mutual fund operations in the U.S., filed with the SEC to create its own Internet fund. The move helped to legitimize the work of the smaller operations and signaled that larger fund firms may start their own Internet funds in the future.

"The entry of Goldman Sachs in the Internet fund sector lends further credibility to what is a fast-growing investment opportunity," said Dave Kugler, president of Monument Funds in a statement. "We expect other major firms to introduce Internet investment products in the future. We view Goldman's move as a sign of the maturing of the Internet investment arena."

Putnam may be the next in line.

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