NEW YORK (CNN/Money) -
Shareholders yanked an estimated $1.1 billion from Fidelity Investments' flagship Magellan Fund in July, which would be the largest monthly redemptions in the history of the closely watched fund.
Magellan, which had ranked as the nation's largest mutual fund until 2000, slipped to No. 3 last month behind the fast-growing Pimco Total Return, managed by bond guru Bill Gross, according to fund-tracker Morningstar. The largest fund continues to be Vanguard 500 Index.
Magellan had assets of $59.9 billion as of July 31, compared with $60.2 billion for the Pimco fund and about $77 billion for Vanguard 500 Index, Morningstar said.
Eric Kobren, editor of the newsletter Fidelity Insight, estimated July outflows of $1.1 billion at Magellan by subtracting the fund's stock market losses from its total asset losses. The fund lost about 7 percent in the month, but assets dropped about 9 percent. That leaves roughly $1.1 billion, according to the newsletter's conservative estimate.
Previously, the biggest monthly redemptions at Magellan were $1 billion in February 2000, according to Financial Research Corp., which tracks fund flows.
Vin Loporchio, a spokesman for Fidelity, pointed out that the fund has been closed to investors for five years, so it hasn't been taking in new money. "We're not focused on the size of the fund." He added that Magellan manager Robert Stansky is an "outstanding" stock picker with a long track record.
Still, Stansky, Magellan's manager since June 1996, has not been at the top of his game this year. The fund is down 23 percent year-to-date as of Aug. 13, putting it in the bottom third of its category, according to Morningstar. Many fund pros consider Stansky to be one of the best in the business, and the industry tracks his moves closely. The fund's five-year record, an annualized return of 1.3 percent, puts it in the top 23 percent of its large blend category. (Click here to read more about Bob Stansky in MONEY magazine.)
| |
Top 5 holdings in Magellan:
| |
| | |
| Source: Fidelity. (Data as of 6/30)
|
|
| | |
|
The fund suffered because of Stansky's large bet on troubled conglomerate Tyco International Inc. (TYC: Research, Estimates), down nearly 79 percent this year. Another top holding, Citigroup Inc. (C: Research, Estimates), is off 31 percent this year.
Magellan, however, is not alone. Kobren said mutual funds across the board experienced steep redemptions in July, when the Dow Jones industrial average suffered its worst monthly point and percentage loss in history, down 507 points, or 5.4 percent.
Estimates for outflows from U.S. stock funds in July range from $40 billion to as much as $50 billion, which would be a record. The Investment Company Institute will have final figures by the end of the month.
"People put a lot of money into equities in the 1990s and maybe they went overboard," Kobren said. "This is not a signal to take your money out of the stock market and put it in bonds."
|
