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Fidelity Tries to Correct Course at Magellan

Feingold tapped to restore some of Magellan's lost luster

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As manager of Trend, Feingold has shown himself to be a bottom-up stock picker. He favors U.S.-based multinationals with bigger, better balance sheets and global trading capabilities. He looks for companies that are growing their sales and earnings faster than the market and avoids large sector bets. While he has invested about half of Trend fund’s assets in traditional growth sectors like technology and consumer discretionary, he also is willing to look for growth in nontraditional sectors, such as consumer staples companies.

Over the past year, Feingold’s approach has served Trend well, as it beat 84% of its peers. As of Aug. 31, Trend’s top three sectors were information technology (29.4% of assets), consumer discretionary (14.1%) and energy (11.9%).

As Feingold shifts his attention to his new charge, I expect he will reposition Magellan away from an aggressive global growth fund to a more risk-managed growth fund that can capitalize better on domestic and global trends. His preference for large domestic multinationals should help lower Magellan’s overall risk profile, while also engaging better with the global markets (including the emerging market consumer base).

While I think Feingold’s strategy makes sense in the current economic climate, I would not advise new investors to buy into the mutual fund just yet, based more on the fund’s makeup than the new management. My top pick within Fidelity’s large-cap growth offerings remains Fidelity Mega-Cap Stock (MUTF:FGRTX). That said, current Magellan shareholders who have significant taxable gains might be better off sticking with the fund rather than selling.

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