NEW YORK (CNNfn) - Beth Terrana, a star stock picker at Fidelity Investments who controlled about $30 billion in assets including the high-profile Fidelity Fund, will step down from active management to become a "mentor" to new managers.
Terrana, a manager for 17 years, will step down from Fidelity Fund, Fidelity Destiny II and Fidelity Advisor Growth & Income Fund effective June 1, the company said.
Also in this column: The biggest mutual funds are coming up short this year; and new figures show that 401(k) investors stayed calm during April turmoil.
Nick Thakore, manager of Fidelity Trend Fund, will take over Fidelity Fund, while Adam Hetnarski, manager of Contrafund II, will take over Destiny II, will continuing to manage Contrafund II. John Avery will take over Fidelity Advisor Growth & Income Fund.
The announcement of Terrana's new role, made late Tuesday, comes in the wake of several high-level departures, including Erin Sullivan, manager of Fidelity Aggressive Growth Fund. Sullivan left to start a hedge fund.
"Beth is clearly one of their big names," said Jim Lowell, editor of the newsletter Fidelity Investor. "The good news is she's not leaving to start a hedge fund."
The company would only say that Terrana will be a mentor and consultant to new managers and investing professionals. Efforts to reach Terrana for comment were unsuccessful.
Lowell said that while it is not clear what Terrana's new role will be, he said it is a rare case where change is good news to Fidelity and its investors.
For one, Terrana's move will give younger managers a chance to shine in the spotlight, Lowell said.
Terrana's move may also be in anticipation of a shift in power when Abigail Johnson, the heir apparent at Fidelity, is likely to take the helm, Lowell said. Abby Johnson is the daughter of chairman Edward C. Johnson III and is senior vice president of Fidelity Management & Research Co.
"It may be Abby building her own bench of advisers," Lowell said. Terrana had her "ear" to the money manager floor in a way that Abby Johnson never could because of her family ties, Lowell said. Unlike Abby Johnson, Terrana is also a veteran stock picker.
"It makes great strategic sense," Lowell said.
While Lowell recommended investors sell Fidelity Aggressive Growth after Sullivan's departure, he remains optimistic about Thakore at Fidelity Fund.
"He certainly has the right mosaic of experience to be able to manage Fidelity Fund well," Lowell said of Thakore.
The biggest mutual funds are coming up short as Wall Street gets battered by mammoth stock swings.
Fidelity Magellan and Vanguard 500 Index Fund are among the titans of the fund industry that are down as much as 2 percent for the week ending May 5 and 2.5 percent for the year, according to fund-tracker Morningstar.
Many of the top ten funds, which are core holdings in 401(k) plans, delivered robust returns in 1999 of as much as 64 percent, industry pros said.
"Investors are going to have to be much more realistic in terms of what they expect in returns," said Burt Greenwald, a mutual-fund analyst from Philadelphia. "They're getting a bucket of cold water thrown on them."
Russ Kinnel, an analyst at Morningstar, said the returns are understandable given that broad indexes are also down for the year.
"The good news is that growth funds that are down this year, if you've been in them for 18 months or more, you've still made tremendous returns," Kinnel said.
Part of the reason for the bad numbers is the Nasdaq's troubles this year, said Sheldon Jacob, editor of the investing newsletter No-Load Fund Investor. Funds like Magellan and Janus both have significant weightings in technology stocks.
"Any fund that's heavy in technology has not done well," Jacob said.
The Nasdaq has fallen in the first two trading days of the week and has struggled with steep losses since March 10. It is down about 11.8 percent this year as of Tuesday's close.
Microsoft's troubles with the U.S. government's antitrust case has also had an impact, Jacob said. Microsoft is the most popular stock in U.S. funds.
Magellan's manager Bob Stansky boosted the technology weighting to 35.1 percent as of the end of March.
"Managers aren't doing the wrong things - the market has changed," Jacob said. "I don't care how good a manager is - if the trend changes, he's going to look bad."
Lowell, of Fidelity Investor, pointed out that the top stocks at Fidelity's biggest funds are General Electric, up just 0.3 percent this year; while Microsoft, second on the list, is down 41.9 percent; MCI WorldCom, third on the list, is off 19 percent; Fannie Mae, fourth, is down 9.2 percent, and AT&T, fifth, is down 25.8 percent.
"It's a bloody landscape for large-cap stocks," Lowell said.
A spokeswoman for Fidelity declined to comment, saying the company doesn't talk about short-term market movements. But she pointed out that Magellan is beating the S&P 500 as of May 5 and that all of the funds have strong long-term records.
New figures show that 401(k) investors stayed calm during April and did not make massive allocation changes despite market volatility.
The Hewitt 401(k) Index, which tracks investment transfers of 1.5 million U.S. workers, shows only normal investment transfers, according to Hewitt Associates, a benefits consultant from Lincolnshire, Ill.
"Perhaps participants are growing accustomed to market fluctuations or they are simply waiting until the volatility subsides," said Lori Lucas, a consultant at Hewitt Associates. 
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