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Magellan chief’s goal: Beat S&P 500 each year

Fidelity Investments’ Magellan Fund has had a long line of larger-than-life managers, from Edward C. “Ned” Johnson 3d, now chief executive, to the legendary stock-picker Peter Lynch.

But Magellan, once the world’s largest mutual fund, has stumbled in recent years. Manager Harry Lange was ousted in 2011 after assets fell by two-thirds.

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We talked to Jeff Feingold, who took over in September 2011. He would not discuss stock picks beyond what a Sept. 28 disclosure showed; here are excerpts from a general interview on markets:

  Your largest holding as of Sept. 28 was Apple, which you’ve overweighted relative to your benchmark, the Standard & Poor’s 500. You’re also a bit overweighted in Google, your second-largest holding. Both have had great runs for years but not recently. Do you still like these stocks?

I really wouldn’t get caught up too much in the short term. That’s generally not where myself and my colleagues look for exits. Google and Apple are both the types of stocks that have markets that I think have been large and growing faster than average and are therefore the kinds of companies that could have larger-than-average market share [and] better-than-average sales and earnings growth.

­What other stocks or sectors do you like?

The global themes that you might expect— mobility, penetration of online commerce, software service. Those are some things that have generally above-average growth rates. Even though consumer staples have traditionally had more defensive characteristics — and thus some growth managers may not have as much weight in them — I’ve been able to find themes like health and wellness and the aging demographic, stocks within the vitamin and nutritional-supplement sectors.

 You’ve had a fairly good start at Magellan, beating the S&P 500 by one to two percentage points in both 12-month and year-to-date returns. Are you satisfied?

Early on in my transition there were a couple of stocks that I would have liked to have back, but that’s a setback for the short term and not the long term. Overall, the fund is off to a good start. If I provide shareholders with a 1 to 2 percent excess performance over the [S&P 500] every year, I think [they’ll] be happy. Very few managers do that.

 And yet Morningstar gives Magellan­ only a one-star rating. Does that bother you?

I’m concerned about the rating, but I’ve only been on the fund for a year. I would hope and believe that over time I’m able to produce great results . . . and that a better rating will evolve.

Jerry Kronenberg can be reached at
Jerold.Kronenberg@gmail.com.
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