Nov. 11, 2002 — Fidelity Investments will remove Robert Bertelson as the portfolio manager of its $3.9 billion Fidelity Aggressive Growth Fund (FDEGX), effective November 15, and replace him with Rajiv Kaul.
The fund has suffered steep losses over the past couple of years, falling 47.3% in 2001, and 27.1% in 2000. Year to date through November 8, the portfolio has dropped 42.9%.
For the three-year period ended Oct. 31, 2002, Fidelity Aggressive Growth declined 34% on an average annualized basis, versus 16.1% for its large-cap growth fund peers.
“The fund’s performance has not been where we would like it to be,” said Vin Loporchio, a spokesman for Fidelity. “We think this appointment is in the best interest of the fund’s shareholders.”
Loporchio noted that Bertelson took over management of the fund in February 2000, which was right at the peak for aggressive growth stocks. “Thus, he has arguably had to manage it through one of worst markets in decades for that style,” he said.
Fidelity Aggressive Growth skyrocketed 103.5% in 1999, the year prior to Bertelson’s stewardship. Erin Sullivan, who had piloted the fund from April 1997 until Bertelson took over, resigned from Fidelity in February 2000 to start a hedge fund.
John Bonnanzio, editor of Fidelity Insight, a newsletter that follows Fidelity, noted Bertelson’s “inauspicious beginning” as the NASDAQ was peaking, as well as the managers underperformance of the index over his tenure.
“While Fidelity requires their portfolio managers to be fully invested, he [Bertelson] had a bit of latitude to take some defensive measures,” noted Bonnanzio. “The aggressive growth mandate at Fidelity would’ve allowed him to invest in any kind of growth stocks, but not necessarily tech stocks,” he added. “I think he should have been more fortuitous within his sectors with regard to his buys. Thus, his stock-picking was not all that great.”
As of Sept. 30, Bertelson had 34.6% of his assets in the battered information technology sector, according to Fidelity’s website.
Bertelson will be reassigned to manage the equity portion of Fidelity Asset Manager Income Fund (FASIX), succeeding Charles Mangum, Loporchio said. Mangum continues to manage several Fidelity products, including the Fidelity Dividend Growth (FDGFX).
Kaul will continue as manager of the Fidelity Advisor Aggressive Growth Fund (FGVAX) and a Variable Insurance product, the Fidelity VIP Aggressive Growth Portfolio, said Loporchio.
Kaul also managed the Fidelity Select Biotechnology (FBIOX) from June 1998 to January 2000, and the Fidelity Select Developing Communications (FSDCX) from February 2000 to June 2001.
“Kaul has been on our radar screens for a few years,” said Bonnanzio. “Based on his performance with the two Fidelity Select products, and the Advisor Aggressive Growth fund, he seems to be pretty true to his `aggressive growth’ charter,” he added, noting that Kaul appears to have come up the traditional way through Fidelity, as the firm has a history of cultivating its analysts. “It’s hard to forecast what he will do with his new appointment, but he looks like a good replacement, at least on paper.”