A well-known Fidelity Investments Chairman Edward C. Johnson III is about to retire next month. He will be succeeded by his daughter, Abigail Johnson, the company said on Monday.
In a memo to Fidelity employees, outgoing chairman Johnson, 86, said he would step aside from the company after “nearly 60 wonderful years” and become a non-executive chairman, consulting with his daughter and Fidelity’s board of directors on occasion, and maintaining office hours at the firm’s Boston headquarters.
During his “reign” in Boston-based Fidelity, the family-controlled company was turned into a mutual fund powerhouse. But over the past decade Fidelity’s advantage has slipped as investors have poured billions of dollars into passive investment strategies, namely index funds run by archrival Vanguard Group.
Fidelity, which operated 462 different mutual funds as of mid-year, has stuck to its roots in active management. Its mutual fund assets are 44% in equities, 25% in money markets, 20% in hybrid fund models, and 11% in fixed income.
Nevertheless, this move was expected, as Johnson is 86 years old and Abigail Johnson has been running the U.S. mutual fund giant on a day-to-day basis as chief executive officer. She will add the chairman’s title and her father will keep regular office hours as chairman emeritus, Fidelity spokesman Vincent Loporchio said. The elder Johnson’s retirement is not related to health reasons, Loporchio said.
John Bonnanzio, editor of Fidelity Monitor & Insight, an independent newsletter for Fidelity investors, said Abigail Johnson’s new title was no surprise.
“At this point, with the clear transition that has taken place over a decade, was it ever in doubt? The only shocker here would have been for something other than this to happen. Effectively, it’s been hers to run for a while now,” Bonanzio said.
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