BOSTON (Reuters) — Fidelity
Investments' asset management head, Ron O'Hanley, will leave the
company at the end of February, executives said on Wednesday, after
a cautious stint running a key unit of the family-controlled
business coming out of the financial crisis.
O'Hanley's replacement will come from within the company and is
expected to be named in coming weeks, according to a letter to firm
employees sent by Abigail Johnson, vice chairman of Fidelity parent
FMR LLC.
O'Hanley, 56, was once seen as a possible candidate to head Fidelity
until a management shuffle in 2012 left him reporting to Johnson,
the daughter of Fidelity Chairman Edward C. "Ned" Johnson III. The
change diminished O'Hanley's power and makes his departure less of a
drama and more a test of how smoothly Fidelity can fill his shoes.
Word of O'Hanley's exit followed news on Tuesday that Mohamed El-Erian
will leave Pacific Investment Management Co, putting the chief
investment officer role solely in the hands of Pimco founder Bill
Gross — a similar case of power consolidating back to an asset
manager's leader.
O'Hanley joined Fidelity in 2010 and helped reverse a tide of
withdrawals by investors from the Fidelity division that offers the
firm's best-known vehicles like its $111 billion Contrafund.
Performance has improved on many products like the $16 billion
Magellan Fund, where O'Hanley oversaw a manager change in 2011.
O'Hanley will leave having taken mainly modest steps to offer
exchange-traded funds and other new products that draw the most
investor cash these days.
The circumspect approach may have been the right one, but it
revealed a shift from the past when Fidelity aimed to dominate broad
lines of business, said John Bonnanzio, editor of the Fidelity
Insight investor newsletter.
For instance, O'Hanley expanded deals to sell ETFs run by BlackRock
Inc and other firms, rather than focus only on building out
Fidelity's own ETF lineup.
"That was a real cultural change for Fidelity," Bonnanzio said.
Lately the company has rolled out more new products of its own, like
a lineup of sector ETFs introduced in October.
Abigail Johnson, Ned Johnson and O'Hanley were not available for
interviews, a spokesman said.
O'Hanley said in his own letter to Fidelity employees that he plans
to spend more time with his family and to work with non-profit
organizations. "Ultimately I will pursue other professional
challenges," he added, but offered no specifics.
James Lowell, editor of fidelityinvestor.com, which follows the
company's products, said the two obvious internal candidates to
succeed O'Hanley are Fidelity equity chief Brian Hogan and Jacques
Perold, head of the FMR Co unit under O'Hanley.
Either would be a good choice but would lack the valuable broader
experience that O'Hanley brought after joining Fidelity from BNY
Mellon Corp, Lowell said.
"Ron brought an outside, institutional perspective to the way
Fidelity's business was being run, and that's mission-critical,"
Lowell said.
Fidelity had $1.87 trillion under management in its funds division
at the end of December, according to Lipper data, trailing only
Vanguard Group Inc of Pennsylvania, with $2.23 trillion. After
several years of outflows, Fidelity reported a net inflow of
investor cash of $17.7 billion last year.
(Reporting by Ross Kerber; editing by
Jeffrey Benkoe, Nick Zieminski and Leslie Adler)
O'Hanley's replacement will come from within the company and is
expected to be named in coming weeks, according to a letter to firm
employees sent by Abigail Johnson, vice chairman of Fidelity parent
FMR LLC.
