Don’t Panic Over Magellan

Stay put. If you’re thinking of bolting the Fidelity Magellan Fund, think again, experts say.

The resignation of its manager, Jeffrey Vinik, on Thursday is no reason to leave the $56 billion fund.

With big mutual funds like Magellan, “an investor should never sell a fund because of a change in managers,” said Sheldon Jacobs, editor of The No-Load Fund Investor newsletter.

Despite its lackluster performance so far this year, Magellan is still a solid performer over the long haul. An investor who put $10,000 in the fund on March 31, 1986, would have had an account worth $40,202 on March 31 this year. That’s a 302.2 percent return.

That’s particularly important to keep in mind if, like most of Magellan’s 4.1 million investors, you are putting retirement money in the fund through a 401(k) plan. Reacting to short-term performance snags or management changes could put a dent in your nest egg.

It’s better to leave the money alone, unless you believe you’re losing so much you can do better elsewhere.

Some investment experts even recommend investing in Magellan now that Robert Stansky has been named its new chief.

“Stansky is going to be a real good fit for Magellan,” says Jack Bowers, editor of the Fidelity Monitor newsletter in Rocklin. “Based on past performance, I think he will be giving the customers what they want by repositioning the fund in a more growth-oriented fashion.”

“You’ve got a massive amount of Fidelity research behind this fund,” says Russ Kinnel, equity fund analyst with the Morningstar Mutual Funds service in Chicago. “They’ve got the best analysts probably of any fund company, and a lot of them devoting time to this fund.”

Stansky has lately been a better performer than his predecessor Vinik.

“Generally I believe that if a portfolio manager who has built a track record moves on, you - the investor - should too,” says Kurt Brouwer, of the Brouwer & Janachowski investment firm in San Francisco. “But the person coming in is a very, very fine manager.”

“It’s got a great long-term track record and Bob has a great track record,” said Donald Dion, publisher and chief investment strategist for Fidelity Independent Adviser, an independent newsletter.