Investors Apparently Leery of Fidelity; Magellan Fund Sees Fall in Share Purchases

Investors appeared to have steered some of their new equity mutual fund purchases away from industry giant Fidelity Investments in March.

Fidelity’s stock funds attracted 12.1% of all new stock-fund investments made in March, the lowest level on a percentage basis since December 1994, when it was 9.5%, according to Trim Tabs Financial Services Inc., a Santa Rosa, Calif., investment advisory service.

In January and February, Fidelity attracted about a fifth of all fund investments, according to Trim Tabs President Charles Biderman, who said he bases his analysis on sales information provided by the Investment Company Institute. The figures exclude sales of Fidelity’s Advisor stock fund group, which is sold mainly by brokers.

The nation’s biggest fund group manages more than 19% of all domestic-stock fund assets.

The recent slowdown in Fidelity fund purchases may be tied to the recent disappointing performance of some of the firm’s biggest stock funds, Biderman said.

Fidelity’s flagship Magellan Fund suffered the biggest decline in new share purchases in February and March, he said. The $56-billion fund is up 2.2% this year, compared with a 5.2% gain of the benchmark Standard & Poor’s 500 index.

The fund’s performance has been hurt by manager Jeff Vinik’s decision to load up on Treasury bonds in the first two months of 1996. At the end of February, Magellan had less money invested in the stock market, 65%, than at any point since 1977, when celebrated fund manager Peter Lynch took control of the fund.

A “crisis of confidence” may be building among Magellan’s shareholders, Biderman said.

Magellan remains one of Fidelity’s top three best-selling funds, the company said, adding that with an overwhelming share of the market overall, a drop in inflows any given month will have only marginal impact on its market leadership.

Fidelity’s share of the nation’s $3-trillion mutual fund business increased to 12.8% in 1995 from 12.1% in the previous year, according to Strategic Insight, a research group that tracks the industry.

Of the biggest fund companies, only Vanguard Group reported a similar gain in market share. Vanguard, the nation’s No. 2 fund group, saw its market share rise to 6.4% last year from 5.9%, according to Strategic Insight.