Magellan Manager Says ‘Nirvana’ Is Ending

Fidelity Magellan fund manager Robert Stansky, whose fund is on pace for its first losing year since 1994, said the stock market nirvana of the last several years is ending as earnings growth slows.

Magellan, the biggest actively managed U.S. mutual fund with $103.6 billion in assets as of Sept. 30, is down 6.5% this year, lagging the Standard & Poor’s 500 index.

“Over the past few years, prior to this year, we’ve had nirvana--falling interest rates, strong corporate earnings and healthy investor inflows into the stock market,” Stansky wrote in the fund’s semiannual report. “Due to the rising interest rates, I think the probability of a slowdown of some magnitude in the economy going forward is likely.”

Stansky said the Federal Reserve effort to counter inflation by slowing the economy boosted stocks such as health care, consumer nondurables, utilities and finance.