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Tuesday, December 02, 2008

Magellan Slowly Fades Away

News summary by MFWire's editors

Fidelity Magellan is a shadow of its former self. The WSJ Fund Track notices this fact and turns to a shareholder report by portfolio manager Harry Lange on Fidelity's Web site to examine what happened.

Needless to say, Lange and Magellan have lost assets with losses on tech and financial stocks. No real surprises there. The real news in the story is just how small Magellan has become.

Just $21.9 billion remained in the fund to start December. At one point Magellan was the largest fund in the nation with as much as $110 billion in assets at its peak in 2000. According to MarketWatch, Magellan no longer even ranks among the 25 largest funds.

The losses, combined with the closing of the fund to all but new 401(k) investors for nearly a decade, explain the funds shrinkage. Adding to the mix is that many 401(k) plan sponsors, including Microsoft and Ford Motor, have dropped Magellan as a plan choice over the past decade. A decade ago AT&T's 401(k) plan was also the largest investor in Magellan; that is no longer the case.

Lange, for his part, admits the investing mishaps that have led to the fund losing 53 percent so far in 2008 (that compares to a 39 percent loss in the S&P 500; both numbers are ugly).

What the ugly performance numbers mean is that Magellan's reopening to all investors at the start of this year (see The MFWire, January 14, 2008) likely came to late for the fund to ever recover its former place in the industry. When the first Magellan was killed in his famous encounter with Lapu Lapu a legend was born to history. This time Magellan shall not return; it looks like it is doomed to fade to obscurity. 

Edited by: Sean Hanna, Editor in Chief

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