Abigail Johnson takes Fidelity on covert new road

When Abigail Johnson began her apprenticeship at Fidelity Investments 25 years ago, the Boston-based firm founded by her grandfather was the nation's biggest mutual fund company and star manager Peter Lynch was enjoying a performance streak at the Magellan Fund - a 29 per cent average return over 13 years - that ranks among the best in the industry's history.

A year ago, Johnson, now 51, was named president of a very different Fidelity. Under her father, Edward Johnson, Fidelity surrendered its leadership and much of its iconic status as a money manager. Fees for investing client money in its own funds now produce less than half of Fidelity's revenue, and rivals BlackRock, Pacific Investment Management and Vanguard Group have shot past Fidelity in assets managed over the past five years.

The firm has in the meantime become America's biggest administrator of 401(k) retirement plans and one of its largest discount brokers, offering clients hundreds of funds in addition to its own.

Few people outside Fidelity know what Johnson plans to do to turn around the 67-year-old firm's fund business. In addition to being the 13th-wealthiest woman in the United States - with assets of US$9.4 billion - Johnson is also among the most mysterious executives in finance.

Fifteen months after being named president, in charge of all of Fidelity's key business units, she has said nothing publicly about her vision or goals for the company. She declined to grant an interview and has rejected all such requests.

The challenges Johnson faces are clear without her enumerating them. Assets in Fidelity's actively managed stock funds fell 16 per cent in the past five years, and management and advisory fees were down an estimated 13 per cent. Operating profit for all of Fidelity fell 31 per cent last year to an estimated US$2.3 billion.