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Fidelity changes guard
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May 21, 2001: 2:32 p.m. ET
Abby Johnson replaces Robert Pozen as head of investment arm
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NEW YORK (CNNfn) - Fidelity Investments announced a management shake-up Monday involving some high-profile executives, but analysts said the move should have little effect on individual Fidelity investors.
Fidelity, the No. 1 U.S. mutual-fund manager, said Abigail Johnson will replace Robert Pozen as president of Fidelity Management & Research Co., the investment adviser to the Fidelity family of mutual funds, effective June 15.
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Having been a fund manager herself, she's experienced what those guys have experienced.
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Jack Bowers
Editor of Fidelity Monitor |
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Johnson is the daughter of Fidelity Chief Executive Officer Edward Johnson III, whose own father founded the company in 1946. Analysts say Abby Johnson owns a majority stake in the privately held company.
Abby Johnson joined Fidelity in 1988 and worked as an analyst and portfolio manager for nine years before serving under Pozen as associate director of the investment division.
"Abby ... has the appropriate skills and experience, she knows the Fidelity organization and culture as well as anyone, and she will enhance this company's long tradition of investment management excellence," the senior Johnson said.
Pozen, who ran Fidelity's investment business since 1997, has accepted a position with President Bush's somewhat controversial Commission on Social Security, which will study ways to reform the federal retirement system, including the investment of Social Security funds in the stock market.
"Things are running very well inside the investment arm of the company, and now is the right time for me to pass the baton to a new generation of leadership and return to a broader agenda of personal interests," Pozen said.
Check your mutual funds at CNNfn.com.
Johnson has big shoes to fill, replacing a man who oversaw the growth of Fidelity's assets under management from $518 billion to more than $900 billion. But Fidelity watchers said Johnson was up to the task and that the change would have little impact on investors.
"I don't think it's a big change, but I do see her as more of a defender of fund managers, getting those guys the right tools and keeping distractions away from them," said Jack Bowers, editor of Fidelity Monitor, a newsletter based in Rocklin, Calif. "Having been a fund manager herself, she's experienced what those guys have experienced."
Johnson's job will be made much easier by the job Pozen did, said Eric Kobren, executive editor of Fidelity Insight.
"Pozen built the organization up and installed the infrastructure to run it," Kobren said. "I'm sure Abby is going to put her own thumbprint on the way this part of the company is managed, but she's not going to start from square one."
Kobren also said Johnson will likely take over as Fidelity's chief executive when her father steps down.
"It's her decision whether or not she wants to run (Fidelity)," Kobren said. "She owns the company. Having said that, I think she does deserve this position."
The importance of remaining private
Johnson's hiring provides stability and will help the company stay private, said Donald Dion Jr., the publisher of the Fidelity Independent Adviser newsletter.
"This should help Fidelity stay on top and not get absorbed and become part of some financial conglomerate," Dion said. "We're extremely pleased with this."
Fidelity has managed to avoid the massive assets under management losses suffered by fund firms like Janus, owned by Stillwell Financial Inc. (SV: up $1.00 to $34.11, Research, Estimates), and the job cuts suffered by firms like Charles Schwab Corp. (SCH: up $0.87 to $20.32, Research, Estimates) because it doesn't have to satisfy impatient stockholders, Dion said.
"Fidelity as a private company will be able to continue to overpay money managers and manage the company on a long-term basis," Dion said. 
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