Fidelity Equity Funds Also Feel the Pain

Equity mutual funds are in the midst of their worst run since the global financial crisis. The group has seen money leave its coffers for 22 consecutive weeks—to the tune of $87 billion of net outflows. One of the name players in the mutual fund industry, Fidelity Management & Research Company, has not been able to escape the investor sentiment; their equity funds have shed $22.5 billion for the year to date. If this pace continues, Fidelity equity funds will record their largest annual net outflows since Thomson Reuters Lipper began tracking fund flows data in 1992, eclipsing the previous amount of $29.9 billion for 2008.

As the chart below illustrates, investors have been pulling their money out of Fidelity’s equity funds on a consistent basis this year. The group has had negative flows for each month except one (February, +$2.1 billion), with the largest outflow occurring for the most recent month (July, -$6.5 billion). The negative flows have been fairly widespread for the year to date, with 11 funds having net outflows of greater than one billion dollars each. Ten of these funds are diversified equity funds, while one is a sector equity fund (Fidelity Select Biotechnology Portfolio, -$1.5 billion). In the diversified equity fund group nine of the ten are domestic equity funds; the one nondomestic equity fund is Fidelity Diversified International Fund, which has shed $1.9 billion. This trend holds true in the greater mutual fund universe as well; domestic equity funds (-$104.2 billion net) have seen significantly more money leave their coffers than have nondomestic equity funds (-$1.6 billion).

The largest net outflows for the year so far among Fidelity’s equity funds belong to Fidelity Contrafund (-$3.7 billion), Fidelity Growth Company Fund (-$2.9 billion), and Fidelity Strategic Advisers Core Fund (-$2.6 billion). These are all actively managed funds, with the Contrafund being run by William Danoff, Steven Rymer in charge of the Growth Company Fund, and John Stone and Niall Devitt leading the Strategic Advisors Core Fund. Interestingly, the largest net inflows for the year to date for Fidelity equity funds belongs to Fidelity 500 Index Fund (+$3.3 billion), offering evidence that investors may prefer passively managed over actively managed funds for their U.S. equity fund investment choices.