Although Fidelity Investments’ mutual funds have been delivering solid returns, many investors have been taking billions of dollars worth of business elsewhere, The Wall Street Journal reports.
“Fidelity’s funds, which tend to be growth-oriented, are having a very good year,” said Morningstar Analyst Dan Culloton. “But their fund flows are lagging that outperformance in the market.”
So far this year, for instance, Fidelity’s flagship Magellan Fund, which is up 20.1% so far this year—beating 71% of its large-cap growth peers—has suffered $6 billion in outflows, while eight other leading Fidelity funds have lost a combined $23 billion, according to Financial Research Corp.
At the end of 1999, Magellan had $105.9 billion in assets. That’s now down 57% to $45 billion. The Fidelity Growth & Income Fund alone has lost the largest amount of assets so far this year, $8.9 billion.
“Generally, we don’t believe that investors should chase performance, but they do, and it takes time for the average investor to catch on,” Culloton said.
Many industry experts have applauded Henry Lange, who took over as Magellan’s portfolio manager two years ago. “He significantly changed the structure of Magellan’s portfolio, emphasizing more tech and foreign names,” said FRC Analyst Owen Concannon. “Since then, outflows have moderated.”
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