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Portfolio Manager Changes at Fidelity Freedom Funds

As the target-date series' process evolves, so does its team.

Janet Yang, CFA, 01/21/2014

Investors in Fidelity's Freedom Funds have seen numerous changes to the target-date series in the past year, including adjustments to underlying funds and a bump in its equity allocation. Plans to move toward a more tactically oriented process recently prompted changes to the series' management team, with newcomer Brett Sumsion joining Andrew Dierdorf and Christopher Sharpe on the funds' manager roster as of Jan. 17, 2014. Following a short transition period, Sharpe is expected to step down from this role, though he'll remain with the firm and retain portfolio management duties at other charges. The changes affect numerous Fidelity funds of funds, including its flagship Freedom Funds, Advisor Freedom Funds, and Freedom Index Funds. Before joining Fidelity, Sumsion spent eight years at DuPont Capital Management. In all, he has about 13 years of asset-allocation and portfolio management experience.

Pyramis, Fidelity's institutional-investor-oriented company, had already transitioned its target-date lineup to a tactical-allocation framework in mid-2013, and because the two groups have historically used comparable philosophical approaches to asset allocation, similar changes were expected at the Freedom Funds. Various pieces of academic and industry research suggest that the market-timing that comes with tactical asset allocation is difficult to consistently execute well. Fidelity says that Sumsion comes to his new post with a strong record of doing so, and the firm also asserts that it has more than 20 years of experience doing the same. Because Sumsion managed DuPont's in-house money and most of Fidelity's work in the area has been on its institutional side, there's not much public data to confirm or refute this.

Even prior to changes over the past year, Morningstar sister company Ibbotson Associates' proprietary Glide Path Stability Score, which provides a relative measure of changes to series' asset-allocation glide paths over the years, had already identified the Freedom Funds as having one of the least stable glide paths in the industry. The series' recent changes likely won't change that classification anytime soon.

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Janet Yang is a fund analyst with Morningstar.
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