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Fidelity Closes 3 Funds, Opens 5 More

Changes at ING and Janus, and more.

Morningstar Fund Analysts, 09/28/2012

Fidelity announced plans to close three funds to new investors in October, as it mulls the possibility of merging or liquidating them. Fidelity Fifty FFTYX, the largest of the three, is one of two concentrated funds managed by Steve DuFour. Fidelity is considering merging the fund into another offering, pointing out that it is not well differentiated from the rest of the company's lineup. That fund lost almost half its value in the 2008 financial crisis thanks to outsized sector bets. Although it has rebounded since DuFour took over in March 2011, it continues to struggle with outflows. The other two funds to close, Fidelity Tax Managed Stock FTXMX and Fidelity 130/30 Large Cap FOTTX, have likewise struggled with recent outflows. Fidelity is considering merging the former into an existing fund and merging or liquidating the latter.

Meanwhile, the company is adding five new actively managed strategies to its Series group of funds, a lineup designed specifically for use in the company's Freedom Funds target-date series. The additions could significantly alter the complexion of the Fidelity Freedom target-date lineup, which has traditionally relied on indexlike funds.

Two of the funds will be led by star managers. Joel Tillinghast, who has run the Silver-rated Fidelity Low-Priced Stock FLPSX for more than two decades, will manage the new value fund, Fidelity Series Intrinsic Opportunities. Although Tillinghast made his name as a mid-cap investor, the new fund's prospectus does not specify a target market capitalization. Will Danoff, who continues to manage the Silver-rated Fidelity Contrafund FCNTX after two decades at the helm, will run the new Fidelity Series Opportunistic Insights. In keeping with the unconstrained strategy that Danoff has pursued successfully at his other charges, that fund will invest in both growth and value stocks. Both funds use the Russell 3000 Index as a benchmark, which could be a sign that both are pursuing an all-cap orientation.  

Of the remaining new offerings, Jim Morrow will lead Fidelity Series Equity-Income. Morrow has run Neutral-rated Fidelity Advisor Diversified Stock FDESX since 2006 and took over Fidelity Equity-Income FEQIX in 2011. Matthew Fruhan, who has run Bronze-rated Fidelity Large Cap Stock FLCSX since 2005 and took over Fidelity Mega Cap Stock FGRTX in 2009, will run the new Fidelity Series Mega CapFidelity Series Stock Selector Large Cap Value will be managed by a team including Bruce Dirks as lead portfolio manager, and Stephen Barwikowski, Justin Bennett, Laurie Bertner, Katherine Buck, Matthew Friedman, and John Mirshekari.

All of the funds except for Intrinsic Opportunities will be available through the Advisor Series platform as well.

The company has been doing some manager reshuffling at other funds as well. Tech and consumer stock analyst Gopal Reddy has joined Fidelity Advisor Growth Opportunities FAGOX as a comanager alongside Steve Wymer. According to Fidelity, Reddy will help Wymer source ideas and provide supplemental research, increasing the $2.6 billion fund's capacity to absorb new assets. However, Reddy won't be helping out at Wymer's other charge, the $43.6 billion behemoth Fidelity Growth Company FDGRX, which is currently closed to new investors.

At Fidelity Emerging Markets FEMKX, manager Bob von Rekowsky is stepping down. Sammy Simnegar, who has run Fidelity International Capital Appreciation FIVFX for the past four years, will replace him. Fidelity cited Simnegar's record of being a top emerging-markets stock-picker and running International Capital Appreciation as key reasons for his promotion.

The company has also added Acadian Asset Management as a subadvisor to Strategic Advisers Emerging Markets FSAMX. Acadian's CIO, John Chisholm, will manage the firm's portion of the fund's assets, while Fidelity manager Wilfred Chilangwa continues to run the remainder of the fund.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.
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