Analyzing the culture at Fidelity Investments, Morningstar unlocked three key elements. The first is star portfolio managers who are allowed to conduct their own brand of investment management and given flexible mandates—but are grounded by such technical criteria as a stock’s price momentum and trading volume.
Peter Lynch, Joel Tillinghast, Will Danoff, Dorsey Gardner, Leo Dworsky, Bruce Johnstone, George Vanderheiden, Neal Miller and even Fidelity Chairman Edward C. “Ned” Johnson III himself have all been star portfolio managers at Fidelity.
The second is risk-taking. The portfolio managers at Fidelity aren’t overly cautious but, often, contrarian risk-takers who participate in the going market trend. “Caution, skepticism and patience have never been the Fidelity way,” Morningstar maintains. Just as Fidelity fund managers, most notably Lynch, concentrated on consumer stocks catering to the middle class in the 1980s and moved to networking companies in the 1990s before the Internet took off, Fidelity has been focusing on alternative energy stocks this decade.
Thirdly, Fidelity practices the Japanese concept of “kaizen,” or seeking perfection through ongoing improvement.