* Harry Lange headed Magellan since 2005
* Underperformance drew criticism at onetime flagship
* Jeffrey Feingold named new manager
(Adds Fidelity comment, detail on Feingold)
By Ross Kerber
BOSTON, Sept 13 Fidelity Investments replaced
Harry Lange on Tuesday as portfolio manager of its famed
Magellan Fund after years of underperformance at the one-time
Lange, 59, becomes the latest in a long line of Fidelity
managers who failed to repeat the success of Peter Lynch, the
star stock picker who became a household name before retiring
in 1990. ((For a graphic link, click on
The fund was once run by Edward "Ned" Johnson, now chairman
of the family-controlled company. Going forward, Fidelity named
Jeff Feingold, 40, turning to another insider who has proven
himself on smaller funds, but now faces a daunting task with
the larger vehicle -- a description that once fit Lange as
Boston-based Fidelity's stock funds have struggled to
evolve beyond the star manager strategy that worked well in the
1980s and 1990s. Last year, equity investors withdrew over $25
billion as its funds posted middle-of-the-pack three and
Lange stumbled repeatedly at Magellan, betting on victims
of the 2008 financial crisis such as American International
Group Inc (AIG.N) and Wachovia, and favoring mobile phone maker
Over the past five years, the fund has lost an average of
2.2 percent annually, trailing 96 percent of peer funds. Lange
has been contrite in his notes to investors, acknowledging weak
picks in technology and consumer stocks. But analysts have
increasingly questioned why he was left in place.
The fund, once the largest in the nation with assets of
over $100 billion during the 1990s, fell from $52 billion when
Lange took over to $17 billion today. Lange's disastrous
financial picks led to an almost 50 percent loss in 2008,
prompting widespread customer defections.
To be sure, some of Fidelity's other stocks funds have
posted far better performances.
Under manager Will Danoff, the $73.7 billion Contrafund has
beaten 98 percent of peer funds over the past 10 years and
continues to do well lately, data from Morningstar show. The
$32.3 billion Low-Priced Stock fund beat 95 percent of peers
over the past 10 years under Joel Tillinghast, who is due to
return from a leave in January.
Fidelity also remains a titan in the fund industry thanks
in part to its brokerage and retirement businesses. Both units
steer a steady stream of assets into Fidelity accounts. The
firm oversaw $1.6 trillion of managed assets and administered
another $2 trillion as of the end of June.
Fidelity said Feingold will continue to manage several
other Fidelity funds including the $1 billion Trend Fund, as
well as Magellan.
POSITION TO BE DETERMINED
Lange will remain with Fidelity in a position to be
determined, Fidelity spokesman Vincent Loporchio said. The
company did not make available for comment Lange, Feingold or
Ronald O'Hanley, who heads Fidelity's asset-management
In a statement, Fidelity Equity Group President Brian Hogan
said Lange, "has put in a great deal of time and effort to take
on the difficult task of managing Magellan through a very
Feingold "has a broad diversity of experience and his
investment style is an excellent fit with Magellan's capital
appreciation investment objective and flexible investment
strategy," Hogan said.
Feingold joined Fidelity as an analyst in 1997 and posted a
strong track record at the Trend Fund, which he has run since
2007. The fund gained an average of 5 percent annually over the
past three years, outperforming 90 percent of similar funds,
according to Morningstar.
By appointing Feingold, who graduated from Brown University
in 1992 and received an MBA from Harvard University in 1997,
Fidelity runs the risk of repeating past failures, analysts
"Many of his winners have been small and mid-sized
companies," said Morningstar analyst Christopher Davis. "I'm
not sure he'll be able to invest in the same kind of companies,
managing a much larger fund."
Lange also had a strong record running a much smaller fund
before taking over Magellan, Davis noted.
John Bonnanzio, who edits a newsletter for Fidelity
investors, said the firm may have kept Lange in the job in the
hope he would eventually stage a turnaround, but that seemed
"I think there was an interest in letting him see if the
portfolio bets he made would eventually work out, but there was
no recovering from 2008," Bonnanzio added.
(Reporting by Ross Kerber; editing by Lisa Von Ahn, Aaron
Pressman and Andre Grenon)