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May 04, 2015 at 06:55 AM
(Bloomberg) — Fidelity Investments is going back to its roots.
In a series of print advertisements, the money manager is highlighting the track records of some of its top stock pickers.
One ad, featuring Joel Tillinghast, whose Fidelity Low-Priced Stock Fund has far outpaced rivals under his tenure, carries the headline: “25 years demonstrating the power of active management.”
Fidelity, which built its reputation on the performance of stock pickers like Peter Lynch, is speaking up for active management to counter the growing belief that index funds are a better choice.
In a recent Bloomberg Markets Global Poll of financial professionals, 42 percent of respondents recommended indexed products as the best option for retirement savings. Only 18 percent voted for actively managed funds.
“The cry for passive has gotten louder over the past five years,” Brian Hogan, president of Fidelity’s equity division, said in an interview at the firm’s Boston headquarters. “My sense is we are entering a period where active funds will do better.”
Investors poured more than $1 trillion into indexed equity vehicles, mutual funds and exchange-traded funds, in the five years ended March 31, according to data from Chicago-based Morningstar Inc. Funds run by stock pickers experienced $266 billion in redemptions over the same stretch.
Beating Targets
Performance explains some of the shift in sentiment. Among active funds that buy U.S. stocks, only 21 percent beat their benchmarks over five years, Morningstar data show. Fidelity has done better, with about 50 percent of its domestic stocks funds beating their targets.
Still, the firm, with almost $800 billion in active equity funds, has seen investors pull money from its stock picking funds in three of the last four years, according to Morningstar.
The most popular Fidelity fund over the past year: a Standard & Poor’s 500 Index fund, which attracted $7.3 billion in investor contributions.
The advertisement featuring Tillinghast has been running since December, when he marked his 25th anniversary as manager of the $46 billion Fidelity Low-Priced Stock Fund. In the 25 years ended March 31, he gained 14 percent a year compared with 8.5 percent for his benchmark, the Russell 2000 Index, according to data compiled by Bloomberg.
