By Charles Stein
(Bloomberg) --Abigail Johnson is taking full control of Fidelity Investments as the money management giant faces intense competition for assets and clients from rivals including Vanguard Group and BlackRock Inc.
Johnson, 54, will succeed her father, Edward "Ned" Johnson, as chairman of the family-run firm in early December, the Boston-based company said Monday. She has been chief executive officer since 2014 and will maintain that role. Edward, 86, is retiring and will become chairman emeritus.
Under Abigail, Fidelity -- the manager of $2.1 trillion in assets -- has been seeking to increase client deposits after losing market share to low-cost index providers such as Vanguard, the biggest mutual fund company. In 2010, Fidelity lost its crown as the largest U.S. mutual fund company by assets. It’s also contending with a trend that’s roiling the industry: customers shunning actively managed funds for low-cost passive investments such as index funds.
In the first 10 months of the year, active equity funds experienced $287.7 billion in net outflows as passive funds reeled in $123.1 billion, according to Morningstar Inc. At Fidelity, the pattern has been much the same. The company had net redemptions of $43.3 billion in active funds while it added $28.8 billion to its passive products.
Third Generation
In response to shifting client demand, Fidelity has beefed up its offerings of index funds and exchanged-traded funds in recent years. Its $102 billion Fidelity 500 Index Fund is now one of its largest funds.
Abigail is the third generation to control the company and, like her family members, has maintained a low profile despite the reach of the firm’s mutual funds across U.S. households and in retirement accounts. She joined the company in 1988 and over the years held a variety of jobs, from managing mutual funds to overseeing different divisions of the business. She has a bachelor’s degree from Hobart and William Smith Colleges and a master’s of business administration degree from Harvard Business School.
She has an estimated net worth of $8.1 billion, according to the Bloomberg Billionaires Index.
Ned Johnson built Fidelity into one of America’s premier money management firms on its reputation for picking stocks. Peter Lynch, who ran the Magellan Fund from 1977 to 1990, became the country’s best known stock picker after his fund gained 29 percent a year under his tenure. Ned Johnson’s father, Edward C. Johnson II, started Fidelity in 1946.
To contact the reporter on this story: Charles Stein in Boston at [email protected] To contact the editors responsible for this story: Margaret Collins at [email protected] Alan Mirabella
