Fidelity pushes stock fund managers on performance

BOSTON, Wed Jun 13, 2012 – Top portfolio managers at Fidelity Investments are getting more scrutiny than ever of their investment decisions as the Boston-based mutual fund company works to reverse a pattern of inconsistent performance.

Stock mutual fund performance, according to Fidelity’s own internal assessment, has ranged from great to lousy over the past few years. In 2008, Fidelity hit rock bottom when its stable of stock funds beat only 36 percent of their peers during the height of the credit crisis.

Four years later, Fidelity executives concede their work is not finished.

“Turnaround is not the word I would use,” Brian Hogan, president of Fidelity’s equity division since 2009, told Reuters in an interview. “That would suggest we are done showing improvement.”

Investors are not waiting around. They yanked $9 billion from Fidelity’s diversified stock funds in 2012 through May after pulling $21 billion last year and $15 billion in 2010, fund researcher Lipper, a unit of Thomson Reuters, said.

American Funds manager Capital Research & Management was the only firm doing worse over the past few years, Lipper said. Between them, the two wounded giants accounted for almost three quarters of the entire industry’s outflow of $89 billion from the category last year and two-thirds so far this year.

Competitors like T. Rowe Price Group Inc. and Vanguard Group, meanwhile, each had stock fund inflows this year of $2 billion and have experienced positive flows for the segment every year since the end of 2008, Lipper said.