By Ross Kerber
BOSTON Jan 22 Fidelity Investments' asset
management head, Ron O'Hanley, will leave the company at the end
of February, executives said on Wednesday, after a cautious
stint running a key unit of the family-controlled business
coming out of the financial crisis.
O'Hanley's replacement will come from within the company and
is expected to be named in coming weeks, according to a letter
to firm employees sent by Abigail Johnson, vice chairman of
Fidelity parent FMR LLC.
O'Hanley, 56, was once seen as a possible candidate to head
Fidelity until a management shuffle in 2012 left him reporting
to Johnson, the daughter of Fidelity Chairman Edward C. "Ned"
Johnson III. The change diminished O'Hanley's power and makes
his departure less of a drama and more a test of how smoothly
Fidelity can fill his shoes.
Word of O'Hanley's exit followed news on Tuesday that
Mohamed El-Erian will leave Pacific Investment Management Co,
putting the chief investment officer role solely in the hands of
Pimco founder Bill Gross -- a similar case of power
consolidating back to an asset manager's leader.
O'Hanley joined Fidelity in 2010 and helped reverse a tide
of withdrawals by investors from the Fidelity division that
offers the firm's best-known vehicles like its $111 billion
Contrafund. Performance has improved on many products like the
$16 billion Magellan Fund, where O'Hanley oversaw a
manager change in 2011.
O'Hanley will leave having taken mainly modest steps to
offer exchange-traded funds and other new products that draw the
most investor cash these days.
The circumspect approach may have been the right one, but it
revealed a shift from the past when Fidelity aimed to dominate
broad lines of business, said John Bonnanzio, editor of the
Fidelity Insight investor newsletter.
For instance, O'Hanley expanded deals to sell ETFs run by
BlackRock Inc and other firms, rather than focus only on
building out Fidelity's own ETF lineup.
"That was a real cultural change for Fidelity," Bonnanzio
said. Lately the company has rolled out more new products of its
own, like a lineup of sector ETFs introduced in October.
Abigail Johnson, Ned Johnson and O'Hanley were not available
for interviews, a spokesman said.
O'Hanley said in his own letter to Fidelity employees that
he plans to spend more time with his family and to work with
non-profit organizations. "Ultimately I will pursue other
professional challenges," he added, but offered no specifics.
James Lowell, editor of fidelityinvestor.com, which follows
the company's products, said the two obvious internal candidates
to succeed O'Hanley are Fidelity equity chief Brian Hogan and
Jacques Perold, head of the FMR Co unit under O'Hanley.
Either would be a good choice but would lack the valuable
broader experience that O'Hanley brought after joining Fidelity
from BNY Mellon Corp, Lowell said.
"Ron brought an outside, institutional perspective to the
way Fidelity's business was being run, and that's
mission-critical," Lowell said.
Fidelity had $1.87 trillion under management in its funds
division at the end of December, according to Lipper data,
trailing only Vanguard Group Inc of Pennsylvania, with $2.23
trillion. After several years of outflows, Fidelity reported a
net inflow of investor cash of $17.7 billion last year.