In order to attract more new business from 40 1K(40 1K plan, also known as 40 1K clause, which started in the early 1980s, was a fully funded pension insurance system established by employees and employers * * *), Fidelity began to forcibly increase its control over many of its large funds and was founded by Peter Lynch. Fund managers go all out to seek fixed income, and no longer take great risks in pursuit of ranking on the ranking table. As the largest and most important sub-fund of Fidelity, Magellan must keep steady progress.
Now, some Magellan investors are getting restless. According to the data of a financial investigation company, during Stanski's tenure, the net redemption amount of Magellan Fund reached $20.3 billion, and even when investors withdrew to a balanced fund last year, the net redemption amount reached $2.4 billion.
Since 1997, Magellan stopped selling to new investors, but the declining return on assets made Fidelity suffer serious losses. At the end of the fiscal year in March 2006, Magellan earned 7 1 million dollars for Fidelity. Last year, this figure dropped to $344 million. For fund holders and companies affected by the decline of Magellan Fund, the main question they face is: Will Fidelity make any changes? In this regard, Stanski's boss, Abi Johnson, the head of Fidelity's management and investigation department, said that both Stanski and she thought the size of the fund was appropriate, and they had no plans to change its structure at present.
Some observers believe that Fidelity may give Stanski and the managers of some large funds more leeway to take the risk of seeking high returns. For Stanski, as he said, a considerable part of his property was invested in Magellan, and he was also under great pressure. Buy, hold or sell?
Roughly speaking, one out of every 65,438+00 balanced fund holders has invested in Magellan Fund. The Cesslers are retirees from Providence, New Jersey. They have held Magellan Fund for more than 20 years, and the $8,000 invested in IRA has now risen to $65,000. Bob Cesler, 73, thinks that Magellan Fund may not be as good as Peter Lynch's management, but it is not bad. On the other hand, Roy Witz thinks that Peter Lynch created the flagship position of Magellan Fund, but now its decline can't help but make people feel a little sad.
Of course, everyone can have their own different views. For Magellan's current situation, generally speaking, investors have two choices:
If the number of Magellan funds you hold reaches the level of taxation. If you bought the Magellan Fund before 1997 stopped selling to new investors, then the amount you hold has reached the level of taxation. If you transfer your investment, you have to pay huge income tax. In this case, you can leave your money in the fund and look for new investments elsewhere.
If the number of Magellan funds you hold is unprofitable. If, like more than three-quarters of Magellan investors, the funds you hold are unprofitable, you don't need to worry about paying taxes. In this case, you should transfer the funds you hold to other funds. In order to achieve economies of scale, Fidelity combined the Magellan Fund with another Essex Fund of $6 million120,000. The fund is also a victim of the stock market depression. It used to be a fund of 654.38 billion. Due to the poor performance during the stock market depression, the only achievement was that there were too many losses, so it received a loss tax reduction of 50 million US dollars.
1977 in may, under the strong recommendation of George Sullivan, president of Magellan, Lynch, who joined the anniversary of fidelity 10, was appointed to replace Sullivan as Magellan fund manager, when he was only 33 years old. Lynch as Magellan fund manager in the first month, the main thing is to exchange stocks, all day busy selling former fund manager Sullivan selected stocks, replaced by his own appreciation of the stock. And he will continue to sell shares and realize them to repay investors' constant investment redemption.
1March 30, 978, it has been 10 months since Lynch took over the Magellan Fund, and the annual report of Magellan Fund came out. The report shows that in the past 12 months, the value of the fund has increased by 20%, while the Dow Jones average index has decreased by 17.6% and the Standard & Poor's index has decreased. This achievement is mainly attributed to the new shares selected by Lynch. His investment strategy is to reduce the shareholding ratio of automobile, aviation, railway, public utilities, chemicals, electronics and energy industries, and increase the shareholding ratio of financial institutions, broadcasting, entertainment, insurance and consumer goods. This strategy enabled him to buy less than 50 stocks, but the value was as high as $20 million. In fact, he never had a comprehensive strategy. His stock selection is entirely based on experience, his own investigation methods and intuition.
Because Magellan Fund is a capital appreciation fund, Lynch can buy any securities without restrictions-from various types of domestic stocks to foreign stocks, even bonds, which gives him room to give full play to his potential, and he can be free from the restrictions of growth fund managers. 1June, 978, Lynch told his investors: "Magellan Fund's portfolio is mostly composed of three types of companies, special cases, undervalued cyclical companies and small and medium-sized growth companies."
During the period of 1979, the S&P index rose by 18.44%, especially Magellan Fund, and its assets increased by 5 1%. The following year, Magellan Fund reappeared the glory of the previous year. The shareholders of Magellan Fund enjoyed a revenue growth rate of 69.9%, while the S&P index only rose by 32% in the same period. After the merger of Magellan Fund and Siram Fund in 198 1, Magellan's assets were 1 billion dollars, and by the end of 1982, it had become 450 million dollars. 1in April 1983, the assets of Magellan Fund reached 10 billion US dollars, which was a milestone of Magellan Fund.
After Magellan Fund absorbed 1983 and 1984, Magellan absorbed1700 million dollars in 1985. At this time, the net assets of Magellan Fund are equivalent to the gross national product of Costa Rica. In order to attract these funds, Lynch keeps making progress, re-evaluating his portfolio, looking for new shares or increasing existing stocks.
1In February, 1986, Magellan Fund assets exceeded the $5 billion mark, with an increase of 23.8% in that year and 39% in the first half of the year. 1987 In May, Magellan Fund became a fund with assets of 1000 billion US dollars, which is equivalent to the gross national product of Sweden. However, in the stock market crash from1September 1987 1 1 year1October 3 1, the dollar was weak, inflation was high, the congressional tax reduction debate, and the US Federal Reserve Bank tightened its money supply, which led to the stock market crash.
However, at the end of 1987, Magellan Fund still earned 1%, which made Magellan Fund exceed the average level of similar funds for 10 years in a row, and Magellan Fund once again exceeded the market level when it rebounded. The stock market crash changed the total assets of Magellan Fund from 1 10 billion in August 1987 to 7.2 billion in October 1987/kloc-0, and the loss was equivalent to the gross national product of Costa Rica.
After the market stabilized, Ford stock was the largest share of Magellan Fund, followed by Federal National Mortgage Association and Merck, followed by Chrysler and Digital Equipment Company.
After the stock market crash 1987, the real winners are growth stocks, not cyclical stocks. Fortunately, Lynch was able to transfer funds from auto stocks to well-run and balanced companies such as Morris, Kodak and Merck in time.
In 1988, the rate of return of Magellan Fund is 22.4%, and in 1989, it is 34.6%. When Lynch retired on 1990, he once again exceeded the market average income level. When Lynch left, Magellan's assets reached1400 million USD, of which1400 million USD was in cash. During Lynch 13' s career, he kept a record of exceeding the average level of the fund, with an average annual yield of 29%, which shocked the industry.
But now it's all history. Since Bob Stanski took over Magellan in June 1996, the average annual return of Magellan Fund is only 7.8%. According to Morningstar, the average annual return rate of the S&P 500 stock index is 8.9%, which is higher than Magellan's. Last year, Magellan Fund lagged behind Standard & Poor's by 4 percentage points. Although this is not very serious, it has negative investor expectations.
From Lynch's departure in 1990 to now, Magellan has only maintained a bleak business by relying on his prominent reputation. In the past ten years, the income has accumulated more than 20 billion assets, so although the operation is not so good, it still ranks 14 in the US 15 balanced fund.
In an interview with Qian magazine, Bob Stanski said smartly that he still believes that he can beat the market, and his goal has not changed, as Qian magazine said in an interview with him two years ago: to surpass the S&P 500 index by 3 to 5 percentage points every year. At the same time, he also admitted that his performance in the past year or two was not so good.
In fact, Stanski's mistakes in these two years are still obvious. Because I am worried that technology stocks are overpriced and the returns are not as good as expected, I have always had reservations about investing in technology stocks. At the end of 2003, the technology stocks in Magellan Fund accounted for 65,438+05% of the total assets, equivalent to 65,438+08% of the S&P 500. On the other hand, Stanski only bought a few shares of some big companies (such as Intel and Cisco), which outperformed the general trend for most of 2003. To make matters worse, Stanski invested heavily in some large pharmaceutical companies (such as Merck, whose share price fell by 65,438+04% in 2003), so that some profitable investments, including those invested in Citigroup, Tyco, Morgan Stanley and Best Buy, could not make up for his losses.
Stanski's mistakes reflect the recent weakness of Magellan Fund to some extent, but cannot explain Magellan's long-term slump. Since 1990, under the management of three different fund managers, Magellan Fund has basically followed the trend of Standard & Poor's 500 Index. Whenever the fund manager changes, the active investment style also brings investors as much return as the index trend, which naturally increases the scale of the fund, but it also inevitably increases the severity of the problem. When Peter Lynch left office in 1990, Magellan Fund had assets of1400 million USD. At the peak of the bubble of 1999, its assets exceeded 1000 billion US dollars, making it the largest mutual fund in the world.
Today, the size of Magellan Fund has even shrunk to $68 billion, which is not only behind the Pioneer 500 Index, but also behind two American funds, which cannot but attract people's attention. Because of the huge capital, if Stanski invests $6,543,800,000 in a promising small stock, no matter what the stock is, it will basically not affect the overall profit of the fund. However, Stanski focused on investing in some giant companies. He invested an average of $290 million in each company he chose, with a peak of more than $2 billion. As a result, his funds were tied up by big companies. The stocks he holds most include Citigroup, American International Group, Viacom, General Motors, Microsoft and other blue-chip giants. Stanski believes that the huge fund size determines that he should mainly buy the stocks of companies in the Standard & Poor's 200 Index (the largest 200 companies in the Standard & Poor's 500 Index), that is, the size of the fund should be commensurate with the size of companies that buy stocks.
Lynch, on the other hand, often buys some varieties that will definitely appreciate after personal inspection, such as small companies with vague prospects, foreign stocks and bonds, which will help his fund get better returns. As he said, don't worry about missing the so-called best investment opportunity, because the real good opportunity can stand the test of time.
Although the outside world has long commented that Magellan is only an index fund, both Stanski and Fidelity denied it. For example, Fidelity pointed out that of the 233 stocks held by Magellan at the end of last year, only 65,438+075 chose the Standard & Poor's 500, and the other 325 companies in the Standard & Poor's 500 were not within the investment scope of the fund. However, since 1990, the trend of Magellan Fund has almost kept pace with the S&P 500 index.