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A Blitz of Funds Reopen for Business
Tweet Share on Facebook December 3, 2008 CommentFidelity Contrafund and Fidelity Low-Priced Stock fund are the latest in a string of high-profile but previously off-limits funds that have reopened to new investors this year. Fidelity said the funds, which have been closed since April 2006 and December 2003, respectively, are re-opening Dec. 16 to offset the onslaught of investors leaving the funds as they retire.
Good funds typically close their doors to new investors to avoid asset bloat. Too much money in a fund makes it hard for a manager to nimbly move in and out of positions. Re-openings replenish assets and give managers more leeway to go bargain hunting for cheap stocks.
Other big names that have reopened this year include Dodge & Cox Stock, Vanguard Explorer, Sequoia Fund, Longleaf Partners, and Fidelity Magellan.
Even though these are all big-brand names, be sure to put them under the microscope before investing.
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Fidelity Magellan's Harry Lange: I Underestimated the Housing Bust and Credit Crisis
Tweet Share on Facebook December 2, 2008 Comment (8)Fidelity Magellan, which rose to fame under the management of Peter Lynch in the 70's and 80's (partly because of its staggering returns, and partly because of its sheer size), morphed into a closet index fund in the early part of this decade. No one would accuse it of that today.
So far this year, Magellan--which currently weighs in at roughly $22 billion in assets--has lost 56 percent, more than 11 percentage points more than the S&P 500. To be fair, not a single diversified U.S. stock fund has delivered a positive return year to date, but Magellan has fallen hard: Currently, it ranks in the bottom 3 percent of funds that invest in large, growing companies.
In the fund's most recent shareholder update, manager Harry Lange (who took over in 2005) says he underestimated how much the housing bust and credit crisis would rock the financial markets. "Given my basic confidence in the global financial system, I continued to pursue a growth-oriented strategy and shunned defensive stocks, which hurt the fund," he said.
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ETFs for Beginning Investors
Tweet Share on Facebook December 2, 2008 Comment (3)Between rent, groceries, loans, and that new Xbox—whatever your poison—you probably don't have an extra $10,000 lying around. Take it from me: If you're looking to invest but have limited cash, exchange-traded funds are one of your better options. I adore index mutual funds, but the upfront investments they require are a huge problem: Most minimums are in the neighborhood of $3,000, and the ones that ask for less tend to charge more in annual fees. So, if you want to build a diversified portfolio with several funds, let's hope you have a generous rainy-day stash.
Of course, there are a few ways to invest on a budget. The most obvious is through an IRA or a 401(k). Other options include target-date or balanced funds, which contain a cocktail of stock and bond funds (the difference is that target dates grow more conservative over time, and balanced funds maintain a static mix). You can also roll the dice with individual stocks.
