Long-time Fidelity Investments chairman Edward C Johnson III will retire next month and will be succeeded by his daughter Abigail Johnson, the company has said.
During his nearly 40-year run as chairman of Boston-based Fidelity, Johnson turned the family-controlled company into a mutual fund powerhouse with $2.1 trillion (€1.98 trillion) in managed assets. His innovations include creating the first money-market fund with a cheque- writing feature.
However, over the past decade, Fidelity’s advantage has slipped as investors each month pour billions of dollars into passive investment strategies, namely index funds run by archrival Vanguard Group.
Mr Johnson’s retirement was not unexpected, as he is 86 years old and Abigail Johnson (54) has been running the US mutual fund giant on a day-to-day basis as chief executive since 2014.
Ms Johnson will add the chairman’s title and her father will keep regular office hours as chairman emeritus, Fidelity spokesman Vincent Loporchio said.
In recent months, Mr Johnson was seen walking with the aid of a cane along Charles Street in Boston’s Beacon Hill neighbourhood. However, his retirement was not related to health reasons, Mr Loporchio said.
Index funds
Founded in 1946 by Abigail Johnson’s grandfather Edward Johnson II, Fidelity remains a leader in the administration of retirement plans, such as keeping records on $5.6 trillion in assets that include corporate 401(k) accounts. Its online brokerage business has more than 17 million retail accounts.
The Johnsons were not available for comment.
Under the direction of Ms Johnson, Fidelity has launched a flurry of index funds in recent years. Those passive funds had $241 billion in assets at the end of October, but that is still a small figure compared with Vanguard’s nearly $2.5 trillion in passive assets, according to Morningstar.
Fidelity’s actively managed funds had $1 trillion in assets at the end of September, led by the $100 billion-plus Contrafund , which alone generates several hundred million dollars a year in management fees.
Actively managed funds have been the linchpin of the Johnson family’s fortune. The family’s net worth is estimated at $26 billion by Forbes magazine, making it the ninth richest family in the United States.
James Lowell, editor of Fidelityinvestor.com, an independent newsletter for investors, said he expected Ms Johnson to increase Fidelity’s outreach to the financial advisers and other intermediaries who steer clients to its funds and retirement accounts.
“She’ll be very focused on the gatekeepers,” Mr Lowell said. “They are as important to her as new products were to her father.”
– Reuters
