Pretty Good. Not Good Enough
Bloomberg Businessweek|June 11, 2018

Fidelity Magellan Fund has made a comeback, but investors are skeptical of active managers

Charles Stein
Pretty Good. Not Good Enough

Jeff Feingold runs Fidelity Magellan, once the world’s most famous mutual fund. But there’s a good chance you’ve never heard of him, which says a lot about the plight of active money managers these days.

From the late 1970s through the ’80s, most Americans who invested in the stock market knew the man behind Magellan. Peter Lynch posted market-beating returns of 29 percent a year, leading many ordinary investors to think the path to riches was choosing the right money manager. Lynch’s successors, including Jeffrey Vinik and Robert Stansky, got plenty of media ink in the 1990s, even if they never came close to matching Lynch’s numbers.

Now, indexing is king, and many individual investors would rather find the lowest-cost benchmark tracker than bet on hot managers. Magellan’s journey from icon to afterthought may be the starkest example of the eroding trust in professional stockpickers. Feingold’s record is strong: Under his tenure, which began in September 2011, Magellan has bested the S&P 500 every full year but 2016. Annualized gains have averaged more than 15 percent, currently putting the fund just a bit ahead of the index. The fund has outdone more than 90 percent of funds with a similar investing style over the past one, three, and five years.

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