Fidelity tries team model for funds
Fidelity Investments said Thursday that it would offer mutual funds run by teams instead of relying on one manager per fund.
Fidelity, which manages $1.5 trillion in assets and is trying to revive its image as a top-performing fund company, has long relied on one manager at each portfolio, while rivals such as American Funds, a unit of Los Angeles-based Capital Group Cos., have teams of managers.
American’s Growth Fund of America, the first U.S. mutual fund to top $200 billion in assets, is managed by 10 portfolio managers and more than 40 analysts.
Fidelity’s move was seen as an effort to increase sales. According to Financial Research Corp., Fidelity took in only $1.6 billion in the first eight months of 2007, while American and Vanguard each had inflows of more than $50 billion.
The multimanager approach will be tried out at the VIP Contrafund Portfolio, a $24-billion fund currently run by William Danoff. A team led by Robert Stansky, who once ran Fidelity’s flagship Magellan stock fund, will take over. Danoff will continue to run Fidelity’s biggest stock fund, the $78.4-billion Contrafund, the firm said.
Anne Crowley, a spokeswoman for Fidelity, said its team model was different from that used by American Funds.
“Each manager will have individual accountability for specific sectors, which is very consistent with our overall approach to managing money and consistent with our philosophy of individual accountability,” Crowley said by e-mail, adding that the team approach won’t be used at most of Fidelity’s funds.
“We have about 350 funds, the vast majority of which are managed by a single individual and will continue to be,” she said.
Janus Capital Group Inc. recently moved to a team approach for its flagship $12.6-billion Janus Fund after fund manager David Corkins quit. Janus said institutional clients favored the team model.