"Here comes Abby" ran a breathless Businessweek headline in 2002. After years of "biding her time", Abigail Johnson looked to be about to come of age as heir apparent of Fidelity, the global fund manager started by her grandfather. It turned out to be the first of many such false predictions. But Johnson may finally be about to have her day in the sun. After years of shilly-shallying, her father, Ned, 82, has "anointed" her to take over the running of the business when he retires.
For the long-suffering Johnson, whose apprenticeship at Fidelity dates back to 1988, the wait may have been worth it, says The Independent. She is now "among the world's most powerful financiers", with overall charge of "a staggering" $1.6trn in savings, pensions and investments.
True to her "Boston Brahmin roots", Johnson rarely gives interviews, so we are none the wiser as to how she intends to run the firm, which is still 49% owned by the Johnson family, with the remaining 51% spread among employees. But with Fidelity now falling rapidly behind rivals (see below), "Abigail's party" had better get going fast.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In Boston, the Johnson family are about the closest you can get to royalty and, although Abby is "no Howard Hughes-style recluse", her upbringing has made her "one of the world's most self-effacing billionaires", says Businessweek. "The reserve is in the genes of a blue-blood, New England family with roots in Boston commerce going back to the early 1800s."
Johnson's ancestor Thomas Perkins who made a fortune trading slaves and shipping furs and opium to China was reportedly in the crowd that heard the first Boston reading of the American Declaration of Independence. She herself was raised "to keep out of the public eye, and let the results speak for themselves".
Born in 1961, one of three children in a closely knit family, Johnson's early life followed a conventional route, says The Independent. After a classic upmarket New England education, she took a degree in art history before the "obligatory" MBA at Harvard. A brief stint with management consultants Booz Allen followed before she joined Fidelity in 1988 as a mutual trust manager.
"Since then she has moved around most parts of the firm, gradually climbing the executive pay grades." But her father always ensured there were others in the frame for the top job. Ned Johnson liked to keep people guessing, says Bloomberg. As one would-be successor, Robert Reynolds, observed on leaving the firm in 2008: "I had the top job at Fidelity, but not the top job. And when I asked my parents, they wouldn't let me change my name to Johnson."
Despite her reserved manner, Johnson is liked and respected in the firm. As one colleague told Businessweek: "She put her nose to the grindstone and got into the mud with the rest of us." The question now is, can she can lead Fidelity out of it?
"Big find manager disease" - is there a cure?
Although Fidelity was founded by his father in 1949, the catalyst behind the fund manager's "phenomenal growth" was Ned Johnson, aka Edward Crosby Johnson III, says Nick Goodway in The Independent. A pioneer of discount stock broking, which made stockmarket investment accessible to millions of middle-class Americans, he ran the famous Magellan Fund from 1963 to 1977, and hired the legendary stockpicker Peter Lynch to take over from there. Lynch "didn't just beat the Street he absolutely destroyed it", says Anand Chokkavelu on Fool.com. From 1977 to 1990, he averaged "mind-blowing" annual returns of 29%.
Those glory days are long gone, says The Daily Telegraph. Pundits believe Abigail will have a "tough time" restoring the confidence of investors who have withdrawn $45bn from the firm in the past five years. The chief problem, says Alan Miller of SCM Private, is "big fund manager disease once a fund manager hits a large size or runs very large funds it becomes extremely difficult to perform".
Fidelity is still the second-largest provider of mutual funds, says Dan McCrum in the FT. But it has fallen behind rivals such as BlackRock and nimbler firms like Vanguard. It missed the "revolution" in alternative investments such as private equity, commodities and property and is only now contemplating a move into exchange-traded funds (ETFs) perhaps too late.
Has Abigail Johnson got what it takes to turn the firm round? "She's got her work cut out," Jim Lowell, editor of FidelityInvestor.com, told The Boston Herald. "Even if this were an easy economy, it would still be challenging to grow a business as big as Fidelity." Johnson may not be able to match her father's entrepreneurial skills, says Businessweek. But her approach might work better now than his philosophy of steady improvement. "Sometimes," she once observed, "you can gradually improve things. But sometimes they don't work, and you've just got to say: Let's grind this baby to a halt."
