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.

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.