More Heads Roll at Fidelity

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Fidelity's rash of layoffs continues. The firm started trimming administrative jobs in late 2008, announcing that it would reduce its workforce by 3,000 employees, or roughly 7%, in 2009. The latest cuts include employees at its operations centers in New Hampshire and Kentucky. The cutbacks aren't just affecting non-investment personnel, though. After a dismal 2008 in which many of its funds tanked--70% of its diversified domestic-equity funds lagged their category averages--and redemptions skyrocketed, Fidelity has also started firing portfolio managers whose funds underperformed. Here is a roundup of some of the most recent changes.

Richard Manuel is out at Fidelity Select Financial Services FIDSX and Fidelity Select Home Finance FSVLX, which he ran since 2007 and 2006, respectively. A heap of battered stocks like AIG AIG, Fannie Mae FNM, Freddie Mac FRE, and Lehman Brothers pounded the funds in 2008; the Financial fund was down nearly 50%, and Home Finance lost 58%. Ben Hesse, who was named comanager of the Financial fund in late 2008, will assume full responsibility there and will also oversee the financials research team. Hesse is a surprising choice given his limited experience. He joined Fidelity as an analyst in 2005 and started running Fidelity Select Brokerage & Investment FSLBX in 2007, where he made some good calls, like dumping Bear Stearns while Manuel was adding to it in the Financials fund. Nonetheless, the choice is concerning. Fidelity's financial research hasn't been its strong suit lately, and putting it in the hands of a relative newcomer in such a challenging market environment seems like a mistake. Meanwhile, Christopher Lee will take over Home Finance. He briefly ran Fidelity Select Electronics FSELX before joining the financials team as an analyst.

Veteran manager Stephen Petersen has replaced Robert Chow at Fidelity Equity-Income II FEQTX. Chow's short tenure at the large-value fund was mixed, with the fund landing in the top and bottom quartiles during the last two calendar years. Petersen brings a fairly effective value style to the fund, which he has used with moderate success at Fidelity Equity-Income FEQIX since 1993.

Fidelity Aggressive Growth FDEGX manager Steve Calhoun has added more to his plate, taking over the struggling Fidelity Mid Cap Growth FSMGX. He replaces Patrick Venanzi, who barely got a chance to settle in after starting in January 2008. Venanzi's transition came at a difficult time considering the market downturn, and the fund landed at the bottom of the mid-growth category. It appears Fidelity wasn't willing to wait and see if he could turn things around, preferring to move him to the small-cap analyst team and go with a slightly more experienced manager. Calhoun has shown potential at Aggressive Growth since coming on board in mid-2005, following a unique strategy that melds bottom-up stock-picking and long-term themes.

Steven Wymer has been named manager of Fidelity Advisor Growth Opportunities FAGOX. He replaces John Porter, whose bold, growth-oriented approach produced erratic returns over his three-year reign, including a loss of more than 55% in 2008. Wymer has produced an impressive record at Fidelity Growth Company FDGRX, which he has managed since 1997. The closed fund's 10-year record beats 90% of its peers' records.PAGEBREAK

Penny Dopkin is retiring after a middling tenure at Fidelity Advisor Diversified International FDVAX. A familiar face replaces her. Bill Bower ran this fund and its retail counterpart, Fidelity Diversified International FDIVX, for a three-year stretch earlier this decade. When the retail version closed in 2004, he moved exclusively to that offering, and Dopkin took over the advisor fund, running it with a different style. Though Bower is a capable manager with a great track record, it's disappointing that Fidelity is adding to his load. His retail fund has nearly $26 billion in assets, and though Dopkin's fund has shrunk quite a bit after 16 straight months of outflows--it's now at $8.5 billion--that's still a lot of money to be running with the same strategy.

That's not the only foreign fund that's bringing back a familiar face. Adam Kutas has returned to Fidelity Latin America FLATX, which he briefly comanaged from 2005 to 2007 with outgoing manager Brent Bottamini. Kutas currently runs Fidelity Emerging EMEA FEMEX, a fledgling emerging-markets fund that inopportunely launched in May 2008. Bottamini will stay on as an emerging-markets equity analyst.