Fidelity keeps $2 billion mandate in New York after star manager's departure
BOSTON (Reuters) - A large New York state retirement plan said on Monday it would keep a popular Fidelity tech fund, whose portfolio manager recently left the company after being accused of sexual harassment, to manage about 10 percent of its assets.
The New York State Deferred Compensation Plan agreed to keep the Fidelity Over the Counter Portfolio as one of its top investment options, said David Fischer, executive director of the board that oversees a plan with about $21 billion in assets. Fischer said on Monday the selection of the Fidelity fund is still subject to negotiation.
The retirement plan issued a request for proposal in June inviting other mutual funds to compete for its $2 billion opportunistic growth mandate. Fidelity’s OTC Portfolio was the incumbent, but it could have been replaced by a rival in the competitive bidding process.
Fischer declined to name the other bidders for the contract.
Until mid September, Gavin Baker ran the $17.4 billion Fidelity OTC Portfolio, one of the hottest U.S. large-cap mutual funds, before being dismissed over claims of sexual harassment, according to people familiar with the situation. Baker, through a spokeswoman, denied the allegation at the time. Reuters was not able to independently verify the claims against Baker.
Fidelity Chairman Abigail Johnson personally signed off on Baker’s ouster, according to people familiar with the situation. And in October she issued a stern warning that she would not tolerate any type of harassment at the company founded by her grandfather, according to a transcript viewed by Reuters.
The New York State Deferred Compensation Plan is one of the largest investors in the fund formerly run by Baker, who was replaced by Sonu Kalra, who also runs the Fidelity Blue Chip Growth Fund.
In terms of performance, the Fidelity Over the Counter Portfolio has been hard to beat.
The fund has produced a year-to-date total return of 38.25 percent, beating 97 percent of its large-cap fund peers, according to Morningstar Inc data. And over the past three years, the fund’s annualized average total return of 16.89 percent easily beats the Nasdaq Composite’s 14.33 percent total return. The fund’s performance over the past 10 years is ranked No. 1 out of 591 funds, according to Lipper, a unit of Thomson Reuters.
Fidelity declined to comment immediately.