Fidelity Magellan fund manager is replaced after weak performance

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The famed Fidelity Magellan mutual fund did Tuesday what it does best: It dumped its manager after years of chronic underperformance.

Colossus fund family Fidelity Investments announced that Jeffrey S. Feingold was replacing Harry Lange at the helm of the fund.

Magellan was one of the best-known and most successful funds in the 1980s under legendary manager Peter Lynch. But it has run through a string of poorly performing skippers since Lynch’s retirement in 1991, and Lange ranked as one of the worst.

During his nearly six years managing Magellan, it ranked in the bottom 10% of large-cap growth funds, according to fund tracker Morningstar Inc. The fund lost 7.2% in that time, compared with a 7% gain for the Standard & Poor’s 500 index, according to data from Bloomberg.

Morningstar, which once gave Magellan its top grade of five stars, dropped the fund to an ignominious one-star rating in 2008.

Magellan’s performance “went from middling to terrible,” under Lange, said Morningstar analyst Christopher Davis.

Lange, who Fidelity spokesman said was unavailable for comment Tuesday, focused on foreign growth stocks, but many of his holdings were in developed markets such as Europe, which have stumbled, not in better-performing emerging markets such as China, said Jim Lowell, editor of the Fidelity Investor newsletter.

Lange also was plagued by some ill-timed bets, including a dive into financial stocks in mid-2008, shortly before the global financial crisis enveloped Wall Street, Davis said. He also bet heavily on Finland’s Nokia Corp., which sank from $41 in late 2007 to less than $6 today.

Magellan’s assets have shriveled to about $17 billion from $55 billion when Lange took over, Davis said. They peaked at $110 billion in early 2000, just before the tech bubble burst.

Feingold, Lange’s successor, has a solid track record, including at the Fidelity Trend Fund, which he will continue to manage.

But Fidelity Trend is much smaller than Magellan, so Feingold must prove that he can thrive at a bigger, higher-profile fund, experts said.

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-- Walter Hamilton