From Fund Star to ETF Contender

For many investors, the Fidelity Magellan Fund (FMAGX) has been around for their entire adult lives. Launched back in 1963, the fund became a lodestar for the mutual fund world. From $20 million in 1977, the fund went on a tear through the 80s, eventually becoming so large as to close to new investors in 1997. While the fund eventually dropped from that all-conquering popularity among investors, it has changed with the times. Now, in an ETF format, it has a strong case for consideration just weeks ahead of its five-year anniversary.

FMAG, the Fidelity Magellan ETF, launched in February 2021. The strategy charges almost the exact same fee as its legendary namesake at 57 basis points (bps). Like FMAGX, FMAG actively invests, with its managers relying on fundamental analysis in their decision-making. FMAG invests in companies from around the world that meet value or growth standards, while also considering each individual issuer’s financials and industry position.

How, then, has the fund performed? While it has not necessarily spiked this year, the strategy has delivered long-term growth for its investors. FMAG has outperformed the S&P 500 over the last three years as of January 15th, per ETF Database data. The fund has returned 21.2% in that time compared to 20.1% for the index.

See more: Leading International ETF FENI Crosses $5 Billion in AUM

Why look to the fund now, then, as its fifth anniversary looms? As an active ETF, FMAG could be poised to join the rising tide of active ETF performance that has defined the ETF ecosystem in recent years. Active ETFs offer adaptability and fundamentals-driven investing that can deliver even amid uncertainty.

Concentration risk, in particular, poses a notable threat to market cap-weighted indexes and portfolios that rely on them heavily. Active ETFs like FMAG, by contrast, rely on managers’ experience and fundamentals, which can help adapt to such risks.

FMAGX, the original Fidelity Magellan fund, offered investors manager expertise that delivered for decades. FMAG offers that same strategy in the cheaper ETF wrapper. For those looking for active ETF exposure and long-term views amid rising uncertainty and a concentrated market, now could be the time for FMAG.

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Fidelity Investments® is an independent company unaffiliated with VettaFi LLC (“VettaFi”). These articles do not form any kind of legal partnership, agency affiliation, or similar relationship between VettaFi and Fidelity Investments, nor is such a relationship created or implied by the articles herein. VettaFi LLC is the author and owner of these articles.

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