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Fidelity's Magellan Gains on Tech Bets

Fidelity's Magellan Fund is riding the success of tech superstars Apple and Google, and beating rival mutual funds.
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TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

Fidelity Investments' Magellan Fund

(FMAGX)

is riding the success of tech superstars

Apple

(AAPL)

and

Google

(GOOG)

this year, returning 7.3% as the

stock market

drops.

So far this year, Magellan has generated the second-best performance among the 50 largest stock

mutual funds

that are actively managed. Almost 35% of the fund is invested in technology and communications companies.

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Apple and Google have brought big windfalls to Magellan this year, gaining 47% and 27%, respectively.

Cisco Systems

(CSCO)

and

Oracle

(ORCL)

also have jumped more than 10%. All four companies were among the fund's top 20 holdings at the end of March.

The

Van Kampen Capital Growth Fund

(ACPAX)

was the group's best performer, returning 18% as the

S&P 500

index fell 4.5%. Van Kampen managers also bet on tech stocks, including

Baidu

(BIDU)

and

Amazon.com

(AMZN)

, which have jumped more than 50% this year.

There were several losers among these funds, which each have at least $10 billion in assets. Financial stocks were largely to blame.

The

Harbor International Fund

(HAINX)

has lost 8% this year. The fund has 27% of its assets in finance companies, such as

AXA

(AXA)

,

Lloyds Banking Group

(LYG)

and

Sumitomo Trust & Banking

. These stocks have dropped more than 20% each.

Closer to home, the

American Washington Mutual Investors Fund

(AWSHX)

shed 7.9%. The fund suffered as

Citigroup

(C)

,

Fifth Third Bancorp

(FITB)

and

SunTrust Banks

(STI)

have lost about half their value.

Bank of America

(BAC)

, another holding, is down 38%.

Kevin Baker became the senior financial analyst for TSC Ratings upon the August 2006 acquisition of Weiss Ratings by TheStreet.com, covering mutual funds. He joined the Weiss Group in 1997 as a banking and brokerage analyst. In 1999, he created the Weiss Group's first ratings to gauge the level of risk in U.S. equities. Baker received a B.S. degree in management from Rensselaer Polytechnic Institute and an M.B.A. with a finance specialization from Nova Southeastern University.