Fidelity Investments, the world's largest mutual fund company, manages four of the 10 US funds with the biggest investor withdrawals this year.
The company's Growth & Income Portfolio had $10.2 billion in net redemptions in the first 10 months of the year, second most after the Vanguard 500 Index fund, according to data from Morningstar Inc. Fidelity Magellan had $7 billion in outflows, while investors pulled $8.8 billion total from Blue Chip Growth and Low-Priced Stock funds.
Boston-based Fidelity has been hampered by subpar returns at some funds while others are closed to new investors. Net inflows among long-term retail funds of $4.1 billion in the first nine months of 2007 trail Capital Group Cos. and Vanguard Group Inc., according to Financial Research Corp. in Boston.
"Flows tell you where a fund has been for the previous three or four years," Chicago-based Morningstar analyst Russel Kinnel said.
Capital Group's Los Angeles-based American Funds is the best-selling fund company, gathering $57.4 billion in net new money from January through September, data from Financial Research show. Vanguard of Valley Forge, Pa., is next, with $57.3 billion. Financial Research excludes money-market funds, which are short-term investments, from its net sales tally.
Eighty-six percent of Fidelity's actively managed domestic equity funds have outperformed their benchmarks this year, a spokesman said. That compares with 17 percent for the same period in 2006. Closely held Fidelity manages about $1.5 trillion including mutual funds and money-market funds.
Investors have redeemed $14.4 billion from Vanguard's largest fund, the $129 billion Vanguard 500 Index fund. The fund tracks the S&P 500, which has dropped 22.93, or 1.59 percent, this year, compared with a 16 percent gain for 2006.
Growth & Income manager Timothy Cohen is lagging behind the S&P 500 index for the fifth year in a row, with an average drop of 27 percent in American International Group Inc., Bank of America Corp., and Wachovia Corp., three of his four top holdings. The fund has $21.8 billion in assets.
The Fidelity Growth & Income Portfolio's redemptions represent 34 percent of assets. A bet on banks and home builders has gone awry, producing a decline of 1.8 percent this year, more than 92 percent of its peer group, according to data tracked by Bloomberg. Cohen outperformed the S&P 500 in three of the four years he was manager of the Fidelity Export and Multinational fund from 2002 through 2005.
Fidelity Magellan, which is closed to new investors, has shrunk to $47.3 billion under Harry Lange, who has managed the fund for two years. Magellan, once Fidelity's largest fund, has returned 14 percent this year.
