Fidelity Replaces Magellan Fund Manager
Fidelity Investments announced that the $17 billion Fidelity Magellan fund (FMAGX) manager, Harry Lange, has been replaced by Jeffrey Feingold. The Wall street Journal reported that Lange stated last April:
Six months from now, I'll look like I'm a star.Well it's only five months later, but Morningstar reports the fund has lagged its large cap growth peers by 6.25 percentage points this year. It's not looking like his confident prediction will come to fruition. Indeed, though the one star Magellan fund has lagged for well over a decade, it is still one of the largest funds due to the power of inertia. Magellan has trailed 85 percent of rivals over the past five years and shrank in size by $33 billion during Lange's tenure, Bloomberg reports.
Jeffrey Feingold, who will take over as fund manager, is currently the manager of other funds including the four star $1 billion Fidelity Trend Fund (FTRNX). This fund has beaten its benchmark according to Morningstar.
My take
Fidelity Magellan was a real star in the 70s and 80s, under famed fund manager Peter Lynch. Unfortunately, unlike stars in the constellations, financial stars don't last. Fund manager stars also tend to burn out quite quickly, mistaking their good fortune for sustainable skill. Just look at Legg Mason's Bill Miller.
For investors, the lesson is not to reach for yesterday's stars since they are unlikely to be tomorrow's.
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