Vanguard Pushes Fidelity From Top Spot in Fund Inflows

Vanguard Group’s mutual funds attracted more money in the first nine months of 1996 than Fidelity Investments’ funds, marking the first time in years that Fidelity failed to occupy the No. 1 spot, according to the Strategic Insight research group.

Fidelity still manages more fund assets than any company--more than $400 billion, compared with Vanguard’s $220 billion. But the lead is shrinking, and firms led by Vanguard and Putnam Investments are gaining ground.

Vanguard, which is known as a more conservative investor than Fidelity, attracted about $25.2 billion, or 11.2%, of new mutual fund investments in the first nine months of the year, Strategic Insight reported. A net $23.8 billion, or 10.6%, flowed into Fidelity’s funds in the same period, the group said.

Putnam saw about $18.5 billion flow into its funds in the first three quarters of 1996, according to New York-based Strategic Insight.

Last year, Fidelity’s funds attracted 15.7% of all mutual fund net inflows, compared with Vanguard’s 7.9% and Putnam’s 3.5%, according to the group.

Fidelity’s loss of the No. 1 spot can be traced in large part to the poor relative performance of some of the company’s biggest stock funds, including its flagship Magellan Fund, said David O’Leary, who runs Alpha Equity Research, a research firm in Portsmouth, N.H.

Magellan was up 6.5% so far this year, as of this week, badly lagging the 15.8% gain of the benchmark Standard & Poor’s 500 index.

Fidelity’s equity fund sales have seen “tremendous growth” over the last five years, and its equity funds have “produced superior” results over the long term, said Robyn Tice, a company spokeswoman. Sales have slowed somewhat this year to last year, but “they’re still quite strong,” she said.

“We expect to have a record year in our 401(k) business,” Tice said.