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Fidelity is Having A Bad Year

02/19/07 - Fidelity

A tough year at Fidelity has Kiplinger.com's Steven Goldberg wondering if the overhaul of stockpicking operations that the mutual fund giant undertook a year and a half ago might need some serious tweaking.

I don't think the wheels are falling off at Fidelity. But plainly some mid-course corrections are in order for the huge revamping of the stockpicking operation that Fidelity launched 18 months ago. Someone high up at Fidelity may -- or may not -- agree. Stephen Jonas, who headed that restructuring, retired at the end of January. Bob Reynolds, Fidelity's chief operating officer, says Jonas, 53, wanted to spend more time with his family and that he and Jonas "came to a mutual agreement that this was a good jumping off point. Performance had nothing to do with it." Maybe so.

Longer-term performance at Fidelity hasn't been awful, but those of us old enough to remember when Peter Lynch turned Fidelity Magellan into the most famous fund in the land do long for the good old days. Over the past three, five and ten years, Fidelity's average U.S. diversified fund ranks above average -- in the 40th to 42nd percentile over each period. The trend at Fidelity's foreign funds has been disturbing. Over the past ten years, they're in the top 32% of diversified overseas funds. Over the past five years, they're in the top 40%. But over the past three years, they rank in the 73rd percentile (or the bottom 27%)."

Despite the rough patch, we still include several Fidelity funds in our MAXadvisor Powerfund Portfolios' Our Favorite Funds report. Fidelity Small Cap Growth (FCPGX) makes the cut in the small cap growth category. Fidelity Europe Capital (FECAX), Fidelity Southeast Asia (FSEAX), Fidelity Global Balanced (FGBLX), and Fidelity Spartan International (FSIIX) also get gold stars.

January 2007 performance review

In January the S&P 500 gained a healthy 1.5%. Over the last twelve months this most-tracked index was up 14.5% - more than the NASDAS’s 6.84% rise, and more than the Russell 2000 small cap indexes 10.43% return. The real story is the 30 Dow stocks, up nearly 1.6% in January and almost 19% over the last twelve months. Mega cap U.S. stocks have been leading, and will likely continue to lead. 

Attempted Letter Bombing at Janus

02/16/07 - Janus

Some nut has targeted Janus Capital in a letter bomb attack:

The first explosive device was found by an employee in an investment firm's mail room in Kansas City. The package contained a pipe bomb.

The second bomb was sent to Janus Capitol Group in Denver, but was rerouted to Chicago. Neither bomb exploded.

"This case is our top priority. We are very serious about solving this case. We put all of our top people on this investigation," said postal Inspector Paul Trimbur.

The person responsible for the bombs has identified himself as "The Bishop." He may be linked to other threatening letters sent to financial institutions over the past 18 months, officials said."


We sure hope it had nothing to do with Janus' appearance in our Six Annual Mutual Fund Turkey Awards this year:

Share The Wealth…And The Losses: Janus Olympus

Olympus merged with Janus Orion (JORNX), bringing with it billions in tax-loss carry-forwards from the tech crash. Now slightly less unfortunate Orion shareholders get to benefit from these Olympus losses. (The portfolio manager can realize gains and wipe them out with losses to minimize year end taxable distributions to shareholders). Both fund shareholders are now in a bigger fund that’s slightly more difficult to manage. What about fees? They remain the same. Chalk up one more tech-wreck track record swept under the rug. It’s win-win…for Janus.

Heck, they were only an honorable mention.

Regular vs. ROTH IRA

Brad O'Neil gives a clear and concise explanation of the differences between a regular and ROTH IRA:

First, a traditional IRA has the potential to grow tax deferred, while Roth IRA earnings have the potential to grow completely tax free, provided you've had your account for at least five years and you don't begin taking withdrawals until you're 59-1/2.

And second, contributions to a traditional IRA may be tax deductible (depending on your income and whether you or your spouse have access to an employer-sponsored retirement plan), while Roth IRA contributions are never deductible.

On the other hand, the traditional and Roth IRAs share some things in common. Both have the same contribution limits ($4,000 in 2007, or $5,000 in 2007 if you're 50 or older) and both can be funded annually with virtually any type of investment - stocks, bonds, Certificates of Deposit."

See also:
Ask MAX: Can I convert my regular IRA to a Roth IRA?
Ask MAX - Are Roth IRAs Too Good to be True?
Ask MAX: A Fee-Free IRA?


Welcome to MAXuniversity

02/14/07 -

Earn your degree from MAXuniversity – MAXfunds.com's own online institution of higher investing education.

Current courses include:

MAXuniversity - Part I – Investing Basics. An overview of the whole investing enchilada. We'll teach you the difference between a stock and a bond, give you the lowdown on options trading, and tell you why investing in Beanie Babies is not really such a good idea.

MAXuniversity - Part II – Everything you always wanted to know about mutual funds, but were afraid to ask. Here you'll learn what mutual funds are, how they work, and why you should probably be in 'em.

MAXuniversity - Part III – MAXfunds.com's Seven Rules of Mutual Fund Investing. A simple, step by step guide for finding this year's hot mutual funds, before they show up on the cover of next year's Money Magazine.