The Rise and Fall of Fidelity Magellan Fund Explained

The Fidelity Magellan Fund was a revolutionary investment vehicle that captured the hearts and wallets of many investors in the 1990s. It was launched in 1963 by Fidelity Investments and was known for its aggressive growth strategy.

The fund's performance was nothing short of spectacular, with a peak value of over $14 billion in assets under management. This was a staggering amount at the time, and it made the fund one of the largest in the industry.

The fund's success was largely due to the investing prowess of its manager, Peter Lynch. Lynch was a well-respected and highly successful investor who was able to consistently deliver strong returns to investors.

The Magellan Fund is actively managed, meaning a single manager or team of managers works directly with the fund to try to outperform the market.

Currently, the Magellan Fund's manager is Sammy Simnegar, who became the sole manager on January 1, 2020. The fund has portfolio managers like Will Danoff and Eddie Yoon, who use research from global analysts to aim for a higher return.

The Magellan Fund manages mutual funds and earns money through assets under investments. It has gone through closed periods, but it's currently open for investors.

The Magellan Fund has a rich history, dating back to 1963 when it was created as the Fidelity International Fund, despite not owning any foreign assets at the time.

Edward Johnson III was the portfolio manager at its inception, and the fund's largest period of growth occurred during Peter Lynch's tenure from 1977-1990. Lynch took over as manager when the fund had about $18 million in assets and grew it to around $14 billion by the time he left in 1990.

The Magellan Fund has had its fair share of ups and downs, with peak years yielding triple-digit returns and increasing its domestic and international fame. However, it also had a period where it closed in 1997 due to its massive size, only to reopen in 2008.

Today, the Magellan Fund is managed by Sammy Simnegar, who became the sole manager on January 1, 2020, and has a team of portfolio managers including Will Danoff and Eddie Yoon. The fund currently has a multi-billion dollar asset value and is open for investors.

The Magellan Fund's current performance is a bit of a mixed bag, with one-year returns of -25.98% but three and five-year returns of 6.90% and 8.25%, respectively.

The Magellan Fund has a multi-billion dollar asset value, which is a significant decrease from its peak of over $100 billion. The fund's assets have fluctuated over the years, but it's still a substantial investment.

The Magellan Fund closed in 1997 due to its massive size, but it reopened in 2008. This closure and reopening had a significant impact on the fund's operations.

Today, the Magellan Fund offers both mutual fund and exchange-traded fund (ETF) versions. The ETF version allows for greater risk management through diversification and access to stocks in multiple locations.

The Magellan Fund's ETF version has a higher expense ratio compared to its mutual fund counterpart. However, this new version can offer more flexibility and convenience for investors.

The original mutual fund versions of the Magellan Fund still exist, providing investors with a traditional investment option.

The Fidelity Magellan Fund's market impact was significant, with its assets under management swelling to $14 billion in 1998.

The fund's popularity led to a huge influx of new investors, causing the fund's management fees to skyrocket.

In 1999, the fund's fees reached a staggering 1.65% of assets, making it one of the most expensive actively managed funds in the industry.

The high fees were a major turnoff for many investors, leading to a decline in the fund's popularity.

The fund's performance also suffered, with its returns lagging behind those of its benchmark, the S&P 500.

The fund's managers were criticized for their inability to adapt to changing market conditions, leading to a series of poor investment decisions.

The Magellan Fund closures were a significant event in the fund's history. In 2005, Peter Lynch, the fund's legendary manager, announced his retirement, which led to a period of decline in the fund's performance.

The fund's underperformance was partly due to the challenges of replacing Lynch's successful investment strategy. The fund's assets under management (AUM) began to decline as investors withdrew their funds.

One of the most notable closures was in 2009, when the Magellan Fund was merged with the Fidelity 500 Index Fund.

In August 2010, Fidelity Investments reopened the Magellan Fund after it was closed in 1997.

The fund had been closed due to its size and the difficulty of managing it.

The Magellan Fund reopened with a new investment minimum of $2,500.

This change allowed more investors to participate in the fund.

The fund's manager, Peter Lynch, was no longer in charge when it reopened.

The Magellan Fund was a high-return investment option with an average annual return rate of 29% during its peak years.

Many investors lost money with the Magellan Fund, despite its high returns, due to poor investment practices.

Lynch, the fund's manager, is still highly respected, having retired in his 40s after a successful investing career.

It's not entirely Lynch's fault that investors lost money, as they were the ones making the investment decisions.

The Magellan Fund had more years with high returns than bad years during Lynch's time as manager.

Lynch's push for active management was a key factor in the fund's success, allowing it to take off and reach incredible highs.