Is the practice of actively promoting “star” fund managers on the wane? Fidelity Investments, at least, appears to be trending in that direction.
The Boston-based mutual fund behemoth, home to Gerald Tsai and Andy Warhol look-alike Peter Lynch, whose index-beating run as the head of Fidelity’s Magellan fund still evokes shock and awe, began slowly moving to a team-based management approach in 2007.
Morningstar senior analyst Christopher Davis estimates $60 billion of the $600 billion Fidelity manages in stock and balanced funds in now managed by teams, still a “relative pittance,” Davis notes, but one that’s growing.
“This line of attack, which divvies up portfolios among sector specialists and keeps sector weightings aligned with a market benchmark, isn’t management by committee,” Davis writes in recent commentary. “Each manager runs its sleeve independent of the others. But it marks a real departure from the one-manager, one-portfolio approach that’s long been the Fidelity way.”
Fidelity first adopted the multimanager approach in 2007 for the annuity version of Fidelity Contrafund and in 2008 for Fidelity Balanced and for a chunk of the Fidelity Freedom funds. Somewhat ironically, Davis adds, “the firm enlisted one of Lynch’s successors at Magellan, Bob Stansky, to oversee the specialists, who have responsibility to pick stocks within their areas of expertise at all three offerings.”