Today it was made official, the Fidelity Magellan Fund (FMAGX) is being re-opened to new investors. The fund had closed itself to new funds and outside investment commitments in 1997 due to rapid growth in new capital. Fidelity said today that the fund will once again be available to new investors beginning Tuesday January 15th. The fund now has $44.8 billion in assets, far below its high of $102 billion reached in 2000.
Fidelity Magellan was made so popular by the great Peter Lynch. Lynch managed Magellan from 1977-1990 and helped the fund gain an eye-popping average annual return of 29%. Lynch's buy what you know strategy of investing that was so successful helped make him the greatest mutual fund manager we have ever seen.
So now that FMAGX is opening again to new investments, the main question you are probably asking is, should you be buying it? Magellan is now managed by Harry Lange, who has been quite successful. Lange describes Magellan as a "go anywhere" fund, meaning it can buy a stock from any group of any marketplace. The fund will continue to primarily consist of large cap domestic stocks, but will dabble in international and smaller cap names. The fund is allowed to invest up to 10% of its assets in any one name.
Last year was a breakout year for Magellan as it returned nearly 19%, well above the average for mutual funds in its peer group. As of its most recent update on November 30, 2007, Magellan held about 20% in foreign stocks and had large positions in technology stocks. Corning (NYSE:GLW) is a name that the fund has been adding to its position to over the past few quarters, and Google (Nasdaq:GOOG) has been a long-time top holding. Agricultural mammoth Monsanto (NYSE:MON) is also a top holding that Lange has been adding to his portfolio over time, and FMAGX has benefited nicely from that purchase.
Lange has a great track record at past mutual funds, making this reopening a pretty good opportunity for investors. This go anywhere fund is still large, but is not nearly as bloated as it once was, and since Lange has arrived the results have been quite solid. Don't count on Fidelity Magellan to return to its market leading ridiculous gains that it had under Lynch, but you could do far worse than adding this fund to your portfolio.
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