10
Fidelity quietly did something great. It named Gopal
Reddy lead manager of
Fidelity Advisor Growth Op-
portunity
FAGOX
as of January
2015
. Reddy has
been comanager since October
2012
. Manager Steve
Wymer will exit the fund in March
2015
.
It’s great news because it elevates Fidelity’s transitions
to the level of Vanguard and T. Rowe Price, where
we often get such news well in advance. This type of
plan enables advisors, investors, and, of course, the
fund managers to prepare for the shift.
This means that if you own the fund, you have plenty
of time to decide if you want to stay in or sell. If you
want to sell, you can decide if you want to do it in
this tax year or the next, so you can better manage
your capital gains.
It’s probably even more helpful for someone who was
considering an investment. Now if you decide to
buy something else, you won’t incur the load for no
reason, nor will you have to start the research
process all over again.
These long-running transitions also make for a
much better handoff. The future manager can become
well-versed in the fund’s strategy and its holdings.
There is often a gradual handoff of parts of the port-
folio, though I don’t know if that will happen here.
At Fidelity, manager transitions have been jarring at
times as a new manager is announced at the date
of the change. The new manager will quickly overhaul
the portfolio and often apply a fairly different strat-
egy. There are no guarantees, but this transition with
a long lead time should generally lead to greater
consistency in style.
Transitions are rough for Fidelity because managers
have only loose affiliations with each other. At a
firm like Wellington, you have managers grouped
by strategies like value or growth, and they tend to
work in a more team-oriented fashion. Not so at
Fidelity. Witness the dramatic strategy changes over
the years at a fund like
Fidelity Dividend Growth
FDGFX
or even
Fidelity Magellan
FMAGX
as each
new manager brought a completely different M.O.
Those are the sort of changes that give
investors heartburn.
You might have a new manager overnight, but his
new strategy might not come into focus for a full
year. What are you supposed to do in the meantime?
Fidelity is now more sensitive to those issues.
Besides this advance notice, the firm also has other
funds where managers are running portions of
funds or where whole teams of sector specialists are
running funds. This, too, reduces the sort of unhappy
surprises that investors hate.
Seeing Fidelity’s efforts on this front makes me feel
better about taking the plunge into one of their
actively managed funds. I’d still look for the same
fundamentals as always: good management, sound
strategy, and low fees. And, of course, there are still
challenges at Fidelity, such as asset bloat.
In case you’re considering Fidelity anew, here are
a few of our higher-rated actively managed equity
funds (that are still open):
Fidelity Contrafund
FCNTX
,
Fidelity Low-Priced Stock
FLPSX
,
Fidelity
Large Cap Stock
FLCSX
,
Fidelity New Millen-
nium
FMILX
,
Fidelity Leveraged Company Stock
FLVCX
, and
Fidelity Mid-Cap Stock
FMCSX
.
Not that I’d suggest buying just any old Fidelity fund.
It still has a number of funds that we rate Neutral—
often because the manager hasn’t been at the fund
long enough to make the case for an investment.
Such funds include Fidelity Dividend Growth, Fidelity
Magellan,
Fidelity Growth Discovery
FDSVX
,
Fidelity Export & Multinational
FEXPX
, and
Fid-
elity Equity-Income
FEQIX
.
œ
Contact Russ Kinnel at
An Enlightened Approach From Fidelity
The Contrarian
|
Russel Kinnel
Our Contrarian Approach
I go against the grain to find
overlooked funds that may be
ready to rally.
