With the changing of the guard at the $50.6 billion, flagship Fidelity Magellan Fund, mutual fund analysts have been busy speculating what direction its new portfolio manager, Harry W. Lange, will bring to the poorly performing behemoth.
Magellan, which has traditionally invested in large-cap, blue-chip stocks, clearly is in need of an infusion of new ideas, as it has languished in the bottom fifth of its peer group for the five years ended Oct. 31.
Given the recent popularity of multi-cap funds and Lange's penchant for picking a wide range of stocks, industry analysts expect "go-anywhere" will become Magellan's new thrust, The New York Times reports. In fact, Fidelity Insight Editor Jim Lowell compared Lange to the famous former Magellan manager Peter Lynch, who took a similar, go-anywhere approach to great success. During Lynch's 13-year reign through 1990, Magellan posted average annual returns of 29% and was the top-ranked general-equity mutual fund.
Lange "is cut from the classic cloth of old-fashioned, 'go-anywhere' fund managers," Lowell said, adding that Lange's strength in finding solid-performing stocks overseas could also be an indication of Magellan's future holdings.
But Magellan won't branch out too far, Dwight Churchill, Fidelity's head of equity portfolio management, told The Times. Unlike some go-anywhere funds that embrace various equity classes, such as fixed income and real estate, Magellan will stick to equities. It will also focus mostly on mid- and large-cap stocks, since investing in small-cap stocks wouldn't make much of an impact on performance, Churchill said.
Certainly, as large-cap stocks have floundered in recent years, multi-cap funds have been attracting more assets. In the first three quarters of this year, multi-cap funds have netted $65 billion in new assets, while large-cap funds have had $76 billion in net redemptions.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.