Plus, Fidelity's latest manager shuffle, distributions, and more.
American Funds has joined the target-date retirement fund party. This month, the fund family's advisor, Capital Research and Management, filed with the SEC to add nine new target-date retirement funds to its lineup. The new funds are Capital Research's first entries in a growing segment of the mutual fund industry.
The earliest targeted retirement date for these new funds is 2010, with the other eight funds' target dates hitting at five-year increments after that through 2050. Capital Research's filings didn't include other information, such as how each offering will allocate assets among sibling funds (including how assets will be split between stocks, bonds, cash, and other investments), who will manage each one, or how much each fund costs.
The introduction of these new funds precedes the Pension Reform Act, scheduled to take effect Feb. 1, 2007, that reduces employers' legal liabilities if they offer certain types of funds in their respective 401(k) plans: target-date funds, balanced funds, and managed accounts. By offering these new funds, Capital Research safeguards its presence--for both its individual funds and its role as some employers' fund family of choice--in 401(k) plans across the nation. However, Capital Research won't offer retail shares of the funds.
Fidelity Changes Managers at Several Big Funds
Fidelity Investments announced a slew of manager changes, effective Nov. 9. Here are the changes at some of the firm's larger funds:
Fidelity Blue Chip Growth FBGRX: To clear the way for John McDowell's retirement from this fund, Jennifer Uhrig will move from Fidelity Advisor Equity Growth FAEGX to Blue Chip Growth and replace both McDowell and Brian Hanson. Uhrig and McDowell put up middling returns during their tenures at their respective funds, but McDowell was focused on much larger stocks so it's a bit more understandable that he produced mediocre returns in a small-cap dominated market.
Fidelity Advisor Equity Growth: Jason Weiner will leave Fidelity Independence FDFFX to replace Uhrig at this fund. Weiner has done an excellent job in three years at Independence, but he'll now be replaced by Bob Bertelson. Bertelson has run a slew of Fidelity funds over his career, including a troubled stint at Fidelity Aggressive Growth FDEGX during the bear market of 2001-02. While he was at the helm there, the fund lost 75% versus negative 35% for the average mid-growth fund.
Fidelity Fifty FFTYX: Jason Weiner also managed this fund successfully before leaving for Advisor Equity Growth. The fund will now be managed by Peter Saperstone, who is already in charge of more than $7.5 billion at Fidelity Advisor Mid Cap FMCAX. His appointment here is a bit worrisome, both because he's less experienced managing compact portfolios and because he's already in charge of a large amount of assets at another offering.
Fidelity Equity-Income II FEQTX: C. Robert Chow will take over for Stephen M. DuFour at this fund. Chow will continue to manage Fidelity Advisor Equity Income FEIRX, which he has managed since 1996. Chow has a slightly better record than DuFour, though he runs a rather plain-vanilla style. The fund has built up capital gains of about 20%, so look for it to make a sizable distribution next year because the fiscal year ended Oct. 31. DuFour will continue to manage institutional accounts at Fidelity, and the company has indicated he may become manager at another mutual fund in the near future.