Fidelity’s popular Magellan mutual fund moves to an ETF format. What two market analysts make of the change

Fidelity's popular Magellan mutual fund moves to an ETF format. What two market analysts make of the change

Fidelity’s move into the world of active nontransparent exchange-traded funds, which disclose their holdings quarterly instead of daily, “probably shouldn’t excite people,” says Main Management’s Kim Arthur. State-controlled firm has been hit by reduced demand for petroleum due to the coronavirus pandemic. Scittinos has been in the family since 1973.

A former relic of the mutual fund industry is about to become exchange traded.

Fidelity filed last week to launch ETF versions of some of its mutual funds including the legendary Fidelity Magellan Fund. Once run by famed investor Peter Lynch, the Fidelity Magellan Fund was the best-performing mutual fund in the world from 1977 to 1990, raking in staggering 29% annualized returns.

That outperformance has since faded, however, and the Magellan fund’s 77-basis-point ownership fees have cannibalized its gains.

The fund has underperformed the S&P 500 significantly over the last 20 years, down 11% while the S&P is up more than 134%.

Now, the fund will enter the ETF sphere in an actively managed, nontransparent format. Unlike standard ETFs, so-called ANTs disclose their holdings quarterly instead of daily in an effort to prevent managers from getting front-run on their strategies.

“This fund’s been out there for 57 years and it’s definitely not the fund that it was when Peter Lynch was running it,” Kim Arthur, president and CEO of Main Management, told CNBC’s “ETF Edge” on Monday.

“It’s underperformed its benchmarks and … probably most of the underperformance is from the 77-basis-point fee that it charges,” he said.

While the ETF structure largely offers investors lower costs and higher tax efficiency than the mutual fund format, there’s not much else to be excited about in this transition, Arthur said.

“If they were to come out and say, ‘Hey, we’re reconstituting this and we are now going to be a thematic innovation strategy — not just growth, but we’re focusing in on where the puck’s going on innovation, on great themes,’ then you could maybe say, ‘We’re going to go ahead and give this thing a second derivative life,'” he said. 

“But to just go ahead and change the wrapper and still have the same underlying kind of benchmark growth less your costs doesn’t really excite people and probably shouldn’t excite people.”

Deborah Fuhr, founder and managing partner of ETFGI, wasn’t so quick to write the repackaged product off.

“ETFs are more tax-efficient than mutual funds and they’re less expensive to run than mutual funds, so, there should be some real benefits for the investors,” she said in the same “ETF Edge” interview.

“Clearly if the fees are less, performance gets better,” she said.

The Fidelity Magellan Fund climbed 1% on Friday.



Author: Lizzy Gurdus

Norway's Equinor to axe 30% of exploration staff amid oil slump

Norway’s Equinor to axe 30% of exploration staff amid oil slump

Like many energy companies across the world, the state-controlled firm has also been hit by the coronavirus pandemic. Photo: Budrul Chukrut/SOPA/LightRocket via Getty

Norwegian gas and oil company, Equinor (EQNR) has announced its slashing 30% of the workforce in its exploration unit, to increase efficiency and reduce cost.

Equinor did not give an exact number but said “hundreds of jobs” will be affected worldwide, by the end of 2022.

Spokesman Erik Haaland told Yahoo Finance, that the company plans to reduce the UK exploration staff by around 60%. He said that a process had been “initiated to increase efficiency and reduce cost in the UK exploration team”, which is mainly based in London.

But, the reductions will not have an immediate impact on exploration plans, Haaland said in an email.

“For 2020 we expect to drill around 30-40 wells globally, and this announcement does not affect the planned activity level for 2020 and 2021.”

Equinor’s exploration spending has decreased by about a third from six to seven years ago. The firm said that it plans to focus on selected areas when searching for new gas and oil resources, including in the US, Brazil and Norway.

Previously, Equinor said it was planning to spend $1.1bn (£853m) on exploration this year, whereas in February it expected to spend $1.4bn.

In August, Equinor confirmed it was making job cuts in the UK, Canada and US in response to the oil downturn.

Meanwhile, the majority state-controlled firm said it will keep production going after dozens of its staff went on strike at the company’s Johan Sverdrup oilfield, largest in western Europe.

Following the company’s announcement, Norway’s Lederne labour union vowed to escalate its offshore industrial action to four other Equinor fields next week.

Like many energy companies across the world, Equinor has also been hit by the coronavirus crisis, after the pandemic reduced demand for petroleum.

On Wednesday, Royal Dutch Shell (RDSB.L) revealed that it will cut 7,000 to 9,000 jobs as part of a major restructuring plan to shift the oil and gas giant to low-carbon energy.

The jobs cuts equate to just over 10% of its workforce. Shell has 83,000 employees, according to its figures at the end of 2019.

The group confirmed in its third quarter update that the headcount cull is set save the group $2bn to $2.5bn by 2022.

On Thursday, shares in BP (BP.L) sank to a 25-year-low after oil prices fell back towards $40 a barrel.

Rising COVID-19 cases have once more put oil prices under pressure, after more than doubling their gains since hitting record lows in April — the height of the coronavirus pandemic.

The company, which had 21,000 employees at the end of 2019, said it would offer staff in some locations, severance packages. But, it will tackle cuts in Norway differently, by giving staff other jobs leaving the rest of reductions to natural attrition, as the state owns a majority stake in the company.


Author: Suban Abdulla

Catonsville siblings keep Scittino’s Italian Market Place in the family as they ease into retirement

Catonsville siblings keep Scittino’s Italian Market Place in the family as they ease into retirement

Sal Schittino and his sister Josie Schittino Schroeter, co-owners of Scittino’s Italian Market Place, announced on their Facebook page that they will be handing over the reins to their second generation of Schittinos.

But don’t expect them to disappear completely from the popular market and carryout establishment on the corner of Edmondson Avenue and Dutton Avenue in Catonsville.

They were there, along with their dad, Frank, and mom, Tina, when it opened on Memorial Day weekend in 1973 and will not hesitate to help ease the transition after turning over the operation to Sal’s son, Lenny, and their nephew, Franco.

Franco is the son of Sal’s and Josie’s late brother Leonard, who died on July 4, 1986, at the age of 39.

“He passed away in the ’80s and thankfully my aunt and uncle swooped in and saved the day and were able to build it to what it is today,” said Franco, who worked at Scittino’s in high school and college.

The Facebook post message also said, “We will still be around to guide them both with every aspect of the business for as long as they need us.”

One thing they won’t need is a lot of changes, especially to the menu.

“We don’t want to touch the menu; we are not going to fix what is not broken,” Lenny said.

Josie, 68, knows what she plans on doing in retirement.

“Enjoying my grandchildren,” she said. “For a while, I’m not going to know what to do with myself. I’m going to pop in occasionally, helping out.”

Sal will make the transition to retirement slowly.

“I just turned 65, so I just probably won’t work as many hours as I did,” he said. “I’ll be hanging in at least another year.”

He admitted there were some struggles during the past 47 years.

“There were times where we weren’t doing that well and we looked at each other and said, ‘What are we going to do,’ and I didn’t know anything else, so we pulled together and made it work,” Sal said. “We tightened our belts and we got lucky, and we did a couple of changes here and there that really did well for us.”

Building expansion came over time, and the residents of Catonsville responded when the kitchen and carry out service area was added.

“We’ve had the kitchen for close to 30 years,” said Josie, noting they opened originally as only a small grocery store and deli.

“When we opened the sub shop, it was pretty much the basics, like cheesesteaks, Italian subs and pizzas, and we just made it bigger and bigger as we grew,” Sal added.

They also realized the bigger the pizza the better, so they added the 20-inch pie to the menu.

“The 20-inch pizza really helped a lot and just some other little things we tweaked here and there, and they seemed to all work and thank God, we are still going,” said Sal, noting they only carry choice or high choice beef.

“We have really expanded the deli as a whole, but our beef in general has seen a surge, so we want to do a little more promotion with that to make sure people know that we have fresh prime beef,” Franco said.

They also added a pastry case and four small tables.

“We put the tables in but I don’t think they would help much, but they helped a lot, more then I thought they would,” Sal said. “It just got better and better.”

The most difficult time was the mid-’80s when they lost their father 13 months before losing brother Leonard.

“They were kind of the backbone of everything,” Franco said.

“For like seven months, I didn’t even get a day off because we didn’t have anybody and we had to just pick it up and do what we had to do,” Sal said.

When the coronavirus pandemic forced restaurants to close on March 16, Scittino’s stayed open.

“We had the grocery, we weren’t considered a restaurant,” Sal said. “To be honest with you, since COVID started we’ve actually been busier because we can deliver groceries and we can deliver different things. We helped a lot of people out.”

Lenny and Franco will continue that tradition of helping local residents.

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Lenny has been working at the business since 2016, after serving six years in the U.S. Navy, and Franco will continue to carry on his father’s legacy.

“I really wanted to come back and try to help this place continue to grow and expand and carry on,” Franco said. “It wasn’t until later in life, after I had accomplished goals in the business world, that I really realized that as far as passion and being willing to commit my time to something, I really felt like the time was right to bring that home.”

Franco and his wife, Eileen, have five kids — Emily, 17, Leo, 15, Mary, 13, Claire, 9, and Kate, 6 — and he admits that ordering food at Scittino’s for them is one of his toughest challenges.

“They can’t agree on anything,” he said. They can’t even agree on pizza.”

Among the changes in the works are marketing some of the specialties.

“We are hoping to build some distribution networks to try to get some of our homemade sausages and sauces on the shelves,” said Franco, who also hopes to continue the catering business when COVID-19 restrictions are lifted. “As people start having parties again, we would try to capitalize on that.”


Author: Craig Clary

Fidelity's popular Magellan mutual fund moves to an ETF format. What two market analysts make of the change

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