Fidelity Investments has named Abigail Johnson as chief executive, a largely expected move that nonetheless ended years of speculation about the succession plans at the top of the mutual fund giant.
Ms. Johnson, 52, the president of Fidelity’s parent company, FMR, is succeeding her father, Edward C. Johnson III, according to a memorandum sent to Fidelity shareholders on Monday. Her appointment takes effect immediately. Mr. Johnson, 84, the son of the company’s founder, will remain chairman.
Fidelity, based in Boston, is the second-largest American mutual fund company, behind the Vanguard Group. It is privately held, with the billionaire Johnson family owning 49 percent and employees the balance. Mr. Johnson’s father started the company in 1946.
Analysts had long speculated about the succession plans of Mr. Johnson, known as Ned, who has been chief executive since 1977. His daughter, who started at Fidelity as an equity research analyst, had seemed the most likely successor after her appointment as head of all funds in 2001. But after the funds turned in a disappointing performance, Mr. Johnson removed her from the position in 2005, raising questions about her future role. Those questions were all but answered when Ms. Johnson was named president last year, seemingly on track to run the company.
Even as it continues to recover from losses in the financial crisis, Fidelity has experienced nearly $10 billion in net investor withdrawals from its open-end mutual funds in the United States this year through September, according to Morningstar data. It currently has about $2 trillion in assets under management. Vanguard, known for its index funds, in contrast to Fidelity’s actively managed funds, surpassed Fidelity in size in 2010.
In the memo, Mr. Johnson also announced changes in Fidelity’s board. He said Bill Byrnes, a director for more than 40 years, would retire, while Gerry McGraw, the president of Fidelity’s institutional business, and Mike Wilens, president of the enterprise services business, would join the board.
“Along with our senior team, we will work together to strengthen Fidelity’s industry leadership and to innovate in ways that enhance the experience we provide to our customers,” Mr. Johnson said in the memo.
Ms. Johnson graduated from William Smith College in 1984 with a degree in art history and from Harvard Business School in 1988. She worked at Fidelity during the summer of her senior year of high school and officially joined the firm after getting her business degree.
Retaining the role of chairman means Mr. Johnson will continue to have authority over strategic matters, said John Bonnanzio, editor of Fidelity Monitor & Insight, an independent newsletter. He predicted that Ms. Johnson would eventually take that title as well, but he said her power would be limited until then.
“Then, she really will be free to steer the firm as she wishes, which may or may not be different from what her father has been doing,” Mr. Bonnanzio said. “That’s really the ultimate prize here.”