One of the risks of investing in mutual funds overseen by a stock-picking manager is that the skipper takes a job at a different firm or retires. Investors in index-tracking exchange traded funds, however, don’t have to worry about a high-profile manager moving on to greener pastures.
ETFs have relatively low costs in part because like index funds, they follow a rules-based benchmark.
Active mutual funds, on the other hand, require a constant guiding hand, and manager ranks see turnover.
Joel Tillinghast, known for his success as the manager of Fidelity Low-Priced Stock Fund, will be taking a short hiatus starting Sept. 6, 2011, and he could return to managing the fund in January 2012, reports Christopher Davis for Morningstar. Tillinghast’s fund includes companies that are cheap and have potential for growth.
According to Morningstar, Fidelity Low-Priced Stock has ranked among the top 12% of its competitors over the last three years, and among the top 25% of the mid-cap field over the last five years.
During the earlier years of the fund, a surge in investor interest made it harder for the fund to own shares of small businesses, and the fund was forced to turn away new investors several times to keep cash flows in line, reports Steven Syre for the Boston Globe.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.