Fidelity replaces manager after mixed picks on financial stocks
Benjamin Hesse's 1-year return as a stock picker in the brokerage and investment sector crushed most of his competition.
But apparently the Fidelity fund manager's 53 percent return at the $717 million Select Brokerage and Investment Management Portfolio , wasn't good enough. Hesse, who has been inconsistent, was replaced late last month as manager of multiple funds with combined assets of more than $1 billion, Fidelity Investments said on Tuesday.
Boston-based Fidelity didn't give a reason for the change. But the No. 2 U.S. mutual fund company behind Vanguard Group has pushed for more consistent performance from fund managers. Last year, customers pulled $24.4 billion from Fidelity's stable of actively managed stock funds.
Hesse's 1-year track record as manager of the Brokerage and Investment Management fund, beat 95 percent of his peers. But his 3-year return was squarely in the middle, according to Morningstar Inc.
As manager of the Select Financial Services Portfolio , Hesse's 1-year, 34.6 percent return through May 31 lagged his benchmark, the MSCI U.S. IMI Financials 25-50 Index, by 5 percentage points.
"He recently shifted off those funds and is exploring other opportunities at the firm," Fidelity spokeswoman Nicole Goodnow said. She added that Hesse is considering another post within Fidelity's stock investment division. An announcement is expected soon, she said.
In recent shareholder updates, Hesse cited weak stock picking as a factor that weighed down fund performance. His bets on VeriFone Systems Inc and Cetip SA Mercados Organizados , Latin America's largest clearing house, proved to be two of his biggest disappointments.
Chris Lee, a Yale-educated Fidelity fund manager, replaced Hesse as the manager of the $680 million Select Financial Services Portfolio and Select Brokerage and Investment Management. Lee joined Fidelity in 2004 as an equity analyst following the semiconductor industry.
Hesse began managing Select Brokerage and Investment Management in 2007 and had a roller coaster ride as a stock picker. In 2008, during the peak of the financial crisis, the fund plummeted 49 percent, only to bounce back with a 50 percent return in 2009 and an 11 percent gain in 2010.
But in 2011, the fund dropped 23 percent, lagging his benchmark by nearly 25 percentage points, according to Morningstar data. He beat his benchmark by 12 percentage points in 2012, though.
(Reporting by Tim McLaughlin; Editing by Jeffrey Benkoe)