MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Tuesday, May 31, 2005 Magellan's Shrinking Fees Fidelity has taken a 16 percent pay cut because of the relatively poor performance of its Magellan Fund. Most of that decline stemmed from the declining asset base in the fund, but some was also the result of the loss of a performance bonus for topping its benchmark. The Boston Behemoth revealed in an SEC filing Friday that its management fee on Magellan for the 12 months ending in March fell to $270 million from $321 million the year before. The fee was also driven down by a 14.8 percent decline in the assets in the fund. Its assets were $56.9 billion at the end of March compared to $66.8 billion the year before. The decline in assets came despite a positive investment return of the fund of 3.14 percent for the 12-month period. Simple arithmetic would imply that the fund lost assets as the result of withdrawals by investors. Magellan faces a headwind not facing most other funds in that it remains closed to new investors outside of retirement plans, meaning that it cannot attract new accounts to make up for redemptions. Fidelity also missed a potential bonus based on its performance as the funds' investment advisor against the S&P 500. While the fund gained 3.14 percent, the index returned 6.69 percent. Over the prior five years, Magellan lost 23.8 percent against a 14.8 loss for the index. That underperformance cost Fidelity more than $89 million in potential management fees for the year ending in March. In March of 2004, the fund's underperformance cost Fidelity $49 million. Printed from: MFWire.com/story.asp?s=9793 Copyright 2005, InvestmentWires, Inc. All Rights Reserved |