Newspaper article THE JOURNAL RECORD

Mutual Funds Moving Targets Amongst Other Securities

Newspaper article THE JOURNAL RECORD

Mutual Funds Moving Targets Amongst Other Securities

Article excerpt

When you set out to evaluate a mutual fund, financial advisers say, it's useful to be aware that you are aiming at a moving target.

Certainly, a given fund you have in your sights may have been traveling the same course, with the same stated objective, for a long time - with an extensive performance record to boast about.

But many things about a fund remain subject to unpredictable change - its size and maneuvering ability, for example, or the identity of people manning its helm.

As a result, funds cannot automatically be presumed to be fixed quantities with relatively interchangeable characteristics, in the same way as some other securities such as Treasury bills or bank certificates.

This point was driven home late last month when Peter Lynch, manager of the enormously successful Fidelity Magellan Fund, announced plans to leave his job at the end of May.

Though he has been running Magellan, the nation's largest mutual fund with more than $13 billion in assets, since 1977, Lynch is just 46 years old.

It was easy for people in the money-management business to assume that when you bought Magellan shares you got Lynch to manage your money for some indefinite period of time. The resident star was unquestionably a prime reason for the fund's allure.

So when Lynch stepped down, pleading a desire to do other things with his life that an ever-increasing work load wouldn't allow, it naturally caused a lot of commotion and uncertainty.

Because of Lynch's renown, this has been the most celebrated case of its kind in recent memory. But it is hardly the only one.

Fund history contains many instances of star managers - sometimes running funds set up specifically to package their reputed genius - abruptly departing for other endeavors. …

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