JANUARY 17, 2000 The Fidelity Shuffle
Reassignments raise a question: Are they promotions or demotions?
By Sandra Ward
Excerpts from Barron online:
The latest round of musical chairs at Fidelity funds points up how difficult it can be to get a handle on where the true talent resides at the company. Seeking to set the record straight, Jim Lowell, editor of the Fidelity Investor newsletter, last year devised a method that would rank the managers by their stockpicking ability from the time each began running money at the firm, regardless of how many jobs they've had. It compares each manager against the appropriate benchmark, whether it be the S&P 500 or the Wilshire 5000 or the Morgan Stanley Japan Small Cap, to more accurately assess their ability. And it sizes up how much risk they take to get results. With so much homegrown talent at Fidelity, such a rating system can prove meaningful. It aims to spotlight who the best managers are over the course of their careers, but especially highlights the last three years.
The best of the bunch, according to the most recent ranking, is Neal Miller, manager of New Millennium, a big beneficiary of his mandate to aggressively invest in New Economy stocks. It's important to note that under Lowell's system, the most recent performance heavily skews the ranking. Miller posted a gain of 108.78% last year. He also scores high over the long term for his ability to pick the right stocks in the right sector at the right time. His technology position of nearly twice the S&P 500's 23.5% certainly helped the fund last year. But he gets high marks, too, for being quick to jump into energy service issues such as Global Marine, Schlumberger and some smaller-cap names. Not only does Miller display impeccable timing, he has a knack for picking names overlooked by others. Lending assistance were telecommunications and developing communication names and an underweighting in pharmaceuticals. Lowell, however, is a bit reluctant to tout the virtues of Miller because the fund he runs has been closed since May 1996.
Erin Sullivan, manager of Aggressive Growth, ranked No. 2, but Lowell notes that while she shows enormous promise and displays a propensity for being in the "right place at the right time, she hasn't had enough time to put her to the test." Sullivan has run Aggressive Growth for just about two years and has been a portfolio manager since 1995.
It should be noted that the top choice last year, Charles Mangum of Dividend Growth, "imploded" in 1999, as Lowell put it. Dividend Growth returned 8.81%. A sizable weighting in drug stocks proved his undoing, and the conservative mandate he follows worked against him, among other things. Yet Lowell still considers Mangum the best of the diversified stockpickers.
#2. I was not aware of the Millenium fund.
Jack |
