Fidelity Unlocks Popular Magellan Fund for New Investors

Fidelity Investments will reopen its widely known Magellan Fund to new investors as of Tuesday for the first time in a decade, the Boston financial services firm announced.

The company made the move to generate new sales to offset redemptions from retiring Baby Boomers starting to tap their retirement nest eggs. Some 85% of the fund’s assets are earmarked for retirement, Fidelity said.

Magellan Fund seeks capital appreciation by normally investing primarily in common stocks of domestic and foreign issuers, and may invest in either growth stocks or value stocks, or both. On October 31, 2005, Harry Lange assumed management of the fund that had been shuttered to new accounts since September 30, 1997, Fidelity said.

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The firm also outlined the changes in the market environment and alterations in its internal operations affecting Magellan since the fund was closed. The market capitalization of the U.S. market has grown by 117%, while the world’s market capitalization has grown by 143%.

In addition, over the past two and a half years, Fidelity has implemented several large-scale initiatives within its equity research unit. During that period, the firm:

  • Hired more than 120 new research analysts. Globally, more than 400 equity analysts now support Fidelity’s equity funds, up from 193 when the Magellan Fund closed.
  • Created a longer-term equity analyst career track. This has allowed analysts to potentially remain in the equity research group and remain with their coverage assignments for longer periods.
  • Created a diversified analyst position. These analysts are embedded in the portfolio management teams at the discretion of the teams’ portfolio managers.
  • Added several managing directors of research. They come from both inside Fidelity and outside the firm, and have brought key managerial resources and expertise to the research organization.

Former CO Adviser Admits $1.7M Scheme Against Teachers

A former AXA Equitable Life Insurance investment adviser has pled guilty to stealing $1.7 million from Colorado public school teachers.

Gordon Robert Moore, 31, entered the guilty plea in Colorado District Court to charges of theft, computer crime, and securities fraud. He faces up to 30 years when he is sentenced February 26.

Colorado Attorney General John Suthers charged that Moore contacted 141 Colorado public school teachers from 11 school districts and asked them to transfer 401(k) assets with the state’s Public Employees Retirement Association (PERA) into different AXA accounts.

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According to the charges, the rollovers violated Internal Revenue Service rules on when participants are eligible to take distributions. Moore allegedly advised the educators to execute the rollovers anyway.

Moore was also charged with forging participants’ signatures on documents stating that the employees had been terminated.

News reports said the probe into the adviser’s activities began after PERA officials learned that improper distributions had taken place. PERA officials said they are cooperating with AXA in a bid to recover the $1.7 million. AXA said that Moore was terminated in July 2007 as a result of the Attorney General’s investigation.

The indictment can be found here.

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