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Today we're taking a closer look at the famed Magellan Fund, a mutual fund with a storied 🧚🏻history in the world of investing. The Magellan Fund was established in 1963 and was managed by legendary investor Peter Lynch from 1977 to 1990.
Peter Lynch’s Investment Philosophy
Peter Lynch is known for his approachable and understandable investment philosophy. He believes that investors should focus their investments on stocks that they can understand and have faith in. He believes that investors should do their 🔬research and trust their judgment, rather than relying on 🏛️Wall Street’s advice.
Lynch also believes that investors should not be too quick to buy or sell💀, but should instead try to buy stocks when they are undervalued and hold onto them for the long term. He also advises investors to be diversified and to invest in stocks from different sectors.
Peter Lynch on why retail investors lose money in the stock market
"People will hear a tip on the bus of some stock and put half their life savings in it before sunset... and when they lose money they blame it on institutions and program trading"
— Ticker History 🗞 (@TickerHistory)
4:10 PM • Feb 17, 2023
The Fidelity Magellan Fund
The Fidelity Magellan Fund(FMAGX) is a mutual fund that is managed by Fidelity Investments.
The fund is actively managed, meaning it does not track a particular index. Instead, the fund selects stocks from different sectors and industries to create a diversified portfolio. The fund has a long-term investment strategy, intending to maximize returns💰 over the long term.
During Lynch's tenure, the fund delivered an average annual return of 29%, beating the S&P 500 Index by an impressive 13 percentage points. Lynch achieved this by investing in growth🪴 companies that he believed had the potential for long-term growth.
The real key to making money in stocks is not to get scared out of them. - Peter Lynch
Post-lynch Era
After Lynch retired💥, the Magellan Fund went through a period of underperformance and management turnover. However, in recent years the fund has regained its footing under the leadership of manager Jeff Feingold. As of February 2023, the fund has over $20 billion in assets under management and has outperformed the S&P 500 Index over the past year.
The Magellan Fund invests primarily in large-cap growth stocks in the United States. The fund's expense ratio is 0.64%, which is relatively low compared to similar actively managed funds.
One potential downside of the Magellan Fund is its relatively high minimum investment requirement of $2,500. However, for investors who meet this ⚡threshold, the fund can be an excellent way to gain exposure to a diversified portfolio of growth stocks.
It's worth noting that, like all mutual funds, the Magellan Fund carries some level of risk. Its performance is subject to market fluctuations, and there is no guarantee of future returns. Investors should carefully consider their own investment goals and risk tolerance before making any investment decisions.
We hope you enjoy this newsletter and as much as we did in making it!
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