Control of world’s most historic mutual fund company goes to founder’s granddaughter.
One of the world’s largest mutual fund companies has just announced a change in leadership. Abigail Johnson will take up her new position as CEO of Fidelity Investments.
As markets work through a chaotic and volatile correction—it’s another nasty October for stocks—Abigail has some serious work ahead of her.
It was way back in 1946 that Abigail’s grandfather Edward Johnson II founded Fidelity Investments. The company’s Puritan fund was the first to offer an income flow from common stocks. Fidelity was the place where Peter Lynch, arguably the most famous mutual fund manager of all-time, made his name. For most of the post-war period Fidelity has been the world’s largest, most recognizable, mutual fund manufacturer. The company even had Paul McCartney record an album just for Fidelity employees.
But the family succession was never a sure thing. Ms. Johnson began working at the firm on summers away from Harvard Business school (she did an undergraduate art history degree). Her grandfather passed the reins to Abby’s father, Ed Johnson II, in the late 1970s. It was long assumed Abby would take the top spot. But last decade Abigail lost her position as head of funds after a couple of years of poor performance. At the time she sold a chunk of her stock, and it seemed the company would go to someone else. But things seem to have been patched up. She was named president last year and is becomes CEO this week. The family control remains.
Her father will still act as chairman of the board. The family still owns 49% of the privately held stock, employees most of the rest. The family has signed agreements that they vote their shares as one block. The question now is whether Fidelity can take back the top spot in the league tables.
Fidelity recently slid into second place on the ranking of world’s largest mutual fund company. Vanguard, which offers trendy index-based funds, overtook Fidelity in terms of size in 2010 as Fidelity lost some $10 billion in assets as investors shifted from active to passive investments. Nevertheless, Fidelity still managers some $2 trillion and the new CEO is, apparently, already hard at work on the next chapter of the company’s history. Interestingly, this week Fidelity also announced a previously undisclosed collaboration between Fidelity Institutional Wealth Services and original U.S. robo-advisor Betterment. Which is interesting…could one of the world’s foundational, original mutual fund companies be getting in on the ground floor of the next big wave in retail investing? We’ll see in the years to come.
As markets work through a chaotic and volatile correction—it’s another nasty October for stocks—Abigail has some serious work ahead of her.
It was way back in 1946 that Abigail’s grandfather Edward Johnson II founded Fidelity Investments. The company’s Puritan fund was the first to offer an income flow from common stocks. Fidelity was the place where Peter Lynch, arguably the most famous mutual fund manager of all-time, made his name. For most of the post-war period Fidelity has been the world’s largest, most recognizable, mutual fund manufacturer. The company even had Paul McCartney record an album just for Fidelity employees.
But the family succession was never a sure thing. Ms. Johnson began working at the firm on summers away from Harvard Business school (she did an undergraduate art history degree). Her grandfather passed the reins to Abby’s father, Ed Johnson II, in the late 1970s. It was long assumed Abby would take the top spot. But last decade Abigail lost her position as head of funds after a couple of years of poor performance. At the time she sold a chunk of her stock, and it seemed the company would go to someone else. But things seem to have been patched up. She was named president last year and is becomes CEO this week. The family control remains.
Her father will still act as chairman of the board. The family still owns 49% of the privately held stock, employees most of the rest. The family has signed agreements that they vote their shares as one block. The question now is whether Fidelity can take back the top spot in the league tables.
Fidelity recently slid into second place on the ranking of world’s largest mutual fund company. Vanguard, which offers trendy index-based funds, overtook Fidelity in terms of size in 2010 as Fidelity lost some $10 billion in assets as investors shifted from active to passive investments. Nevertheless, Fidelity still managers some $2 trillion and the new CEO is, apparently, already hard at work on the next chapter of the company’s history. Interestingly, this week Fidelity also announced a previously undisclosed collaboration between Fidelity Institutional Wealth Services and original U.S. robo-advisor Betterment. Which is interesting…could one of the world’s foundational, original mutual fund companies be getting in on the ground floor of the next big wave in retail investing? We’ll see in the years to come.
