March 16, 2000
Mutual Funds
Fidelity Is Losing Hot Pickers
From Its Tech-Sector Funds
By JOHN HECHINGER
Staff Reporter of THE WALL STREET JOURNAL
BOSTON -- Some of Fidelity Investments' hottest technology stock pickers are getting picked off.
In the past three months, the No. 1 mutual-fund outfit has lost the managers of its five best-performing sector funds of 1999, all in technology. The latest defector is Dylan Yolles, manager of Fidelity Select Software and Computer Services Portfolio, who is leaving to join Capital Research & Management Co., according to a person familiar with the matter.
Fidelity watchers say the losses of such promising managers from the sector funds -- concentrated investment pools that focus on industry segments and are aimed at aggressive investors -- demonstrate the demand for technology experts.
Sector funds are often training grounds for managers of marquee Fidelity funds (current Magellan manager Robert Stansky cut his teeth in a Fidelity aerospace sector fund), and some analysts believe the defections could leave the company with a weakened bench.
"Fidelity's younger, most talented managers made it to the top of the class on the back of the New Economy," said Jim Lowell, editor of newsletter Fidelity Investor. "Now, they're getting out of Fidelity's saddle. It's got to be very troubling for Fidelity."
Fidelity plays down the losses. A spokesman said the firm has many other "capable and talented" technology analysts and "devotes countless hours to training and recruiting talent." The firm noted that the technology sector funds, which often change managers, have strong long-term records. "We've always prided ourselves on our deep bench," he said.
It was unclear what Mr. Yolles, 31 years old, will be doing at Capital Research, the Los Angeles manager of American Funds, the No. 3 fund company. The company didn't return calls. At Fidelity, Mr. Yolles, who managed Select Software since September, will be succeeded by Telis Bertsekas, who joined Fidelity in 1997 as an analyst for beverage and tobacco stocks.
Recently, Matthew Grech, who managed Fidelity Select Electronics last year, left to start a hedge fund with Thomas Weisel Partners, a San Francisco securities firm. Andrew Kaplan, manager of Fidelity Select Developing Communications and Fidelity Select Technology, left to join Pequot Capital Management Inc., a Westport, Conn., hedge-fund manager. And Michael Tempero, manager of Fidelity Select Computers, left to join Harvard Management Co., which oversees Harvard University's endowment. Also, Erin Sullivan, manager of the tech-heavy Fidelity Aggressive Growth Fund, which was Fidelity's best-selling fund last year, left to start her own hedge fund.
In the technology boom, these funds had eye-popping returns last year. And investors have poured in money. The funds attracted $4 billion of Fidelity's $20.3 billion in net sales of stock and bond funds last year, according to Financial Research Corp., the Boston fund tracker.
Write to John Hechinger at john.hechinger@wsj.com1
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