Fidelity Management & Research is one of the largest, most recognizable mutual fund and brokerage providers in the United States. Edward Johnson founded the company in Boston in 1946, and today it is led by his granddaughter, chairman and chief executive officer Abigail Johnson. Fidelity services 32 million investors and 75 million customer accounts. A staggering $7.3 trillion in assets have been invested with Fidelity. It is also home to some of the most successful portfolio managers in the mutual fund business, including Peter Lynch, who oversaw the Magellan Fund between 1977 and 1990, earning a 29% annualized return and swelling the fund’s assets from $18 million to a stunning $14 billion.
Here we look at four other managers who have made a mark at Fidelity.
- Joel Tillinghast manages the Fidelity Low-Priced Stock Fund, which has handily beat its benchmark during his tenure.
- Will Danoff, manager of the famed Fidelity Contrafund, has also outperformed his benchmark.
- Sonu Kalra leads the Fidelity Blue Chip Growth Fund, which has returned 17.01% over the past decade, better than its benchmark.
1. Joel Tillinghast
Joel Tillinghast joined Fidelity as an equities analyst in 1986, having previously worked at Bank of America, Drexel Burnham Lambert and Value Line Investment Survey. After phoning Peter Lynch to talk about a stock, a conversation that lasted for 1½ hours and covered a range of companies, Lynch reportedly told his assistant: “We have to hire that guy.”
In 1989, Tillinghast was made portfolio manager of the Fidelity Low-Priced Stock Fund. The fund has $23 billion in assets and has returned an average of 12.52% annually since inception, compared with 8.78% for its benchmark, the Russell 2000. Tillinghast has also managed the Fidelity Series Intrinsic Opportunities Fund since its inception in 2012, though with less impressive results. The fund has $11.6 billion in assets and has returned 10.14% annually since inception, under-performing its benchmark the Russell 3000, which returned 12.7% over the same period of time.
Tillinghast describes his approach to the Fidelity Low-Priced Stock Fund as “value intrinsic.” He believes in keeping a fund’s turnover ratio low. The aforementioned funds have turnover ratios of 6% and 9%. His five principles of investing are: make decisions rationally, invest in what you know, work with honest and trustworthy managers, avoid businesses prone to obsolescence and financial ruin, and value stocks properly.
The $96.4 billion Fidelity Contrafund has returned 12.58% annually since it was founded in 1967.
2. Will Danoff
Will Danoff joined Fidelity as an equities analyst in 1986 after finishing an MBA at the Wharton School of the University of Pennsylvania. He served as portfolio assistant for the Magellan Fund in 1989 and 1990, during Peter Lynch’s final years at the helm. In 1990, Fidelity gave Danoff responsibility for the Contrafund, which has traded since 1967.
The Fidelity Contrafund is a large-cap growth fund with $96.4 billion in assets. Over the past decade, the fund has returned an average of 14.73% annually, compared with 13.15% for the S&P 500. Danoff seeks companies whose value is not fully recognized by the markets, be it a growth stock or value stock or both. Danoff was a notable early investor in Facebook (FB). He began building a stake in 2011 and it was the fund’s largest contributor to performance in 2019.
In 2013, Danoff brought pupil John Roth on board as co-manager of the Fidelity Advisor New Insights Fund, which Danoff also manages. To some, the move indicated Danoff had handpicked his successor to eventually manage the Contrafund.
The amount of customer assets managed by Fidelity.
3. Sonu Kalra
Sonu Kalra earned an MBA from the Wharton School of the University of Pennsylvania and joined Fidelity in 1998. He initially analyzed equities, covering media, entertainment, technology hardware, software, networking and internet stocks. He has managed a number of funds for Fidelity, including the Fidelity Select Technology Portfolio, the Fidelity Advisor Technology Fund, and the Fidelity VIP Technology Portfolio.
In 2009, Kalra assumed responsibility for the Fidelity Blue Chip Growth Fund, a large-cap blue-chip growth fund that has $26.3 billion in assets. Kalra looks to invest at least 80% of the fund’s assets in blue chip companies with above average growth potential. These companies are typically found in the S&P 500 or the Dow Jones Industrial Average, and have a market capitalization of at least $1 billion. Over the past decade, the Fidelity Blue Chip Growth Fund has returned an average of 17.01% annually, compared with 16.07% for its benchmark, the Russell 1000 Growth index.
4. John Roth
John Roth joined Fidelity in 1999. In addition to co-managing the Fidelity Advisor New Insights Fund with Will Danoff, he is responsible for the $2.2 billion Fidelity New Millennium Fund and the $4 billion Fidelity Mid-Cap Stock Fund.
At the New Millennium Fund, Roth seeks to get in early on growth or value stocks that are positioned to take advantage of long-term changes in the marketplace. He does this by focusing on companies that stand to benefit from advances in technology, product innovation, economic shifts, demographic shifts and changes in social attitudes. The fund has returned 10.34% annually over the past decade, under-performing the S&P 500, which has returned 13.15%. The Fidelity Mid-Cap Stock Fund hasn’t performed any better. It returned 9.92% over the past decade, compared with 10.45% for its benchmark, the S&P MidCap 400.
Roth is known within Fidelity’s offices for his 2004 call to buy Google’s initial public offering at $100 a share. The shares are up 28-fold since then.