The long arms of Fidelity
Name: Rajiv Kaul
Title: Portfolio Manager
To say Fidelity Investments has a stake in most of the high-profile biotechs isn't hyperbole. The firm has the singular combination of dedicated biotech funds, enormous institutional reach and a dedicated life science venture arm. At the helm of this massive machine of biotech influence is Rajiv Kaul, who manages two enormous biotech Fidelity funds, one a mutual fund and the other for institutional investors, which have roughly $15 billion under management combined.
Kaul takes a patient, long-term view, driven by a belief in the fundamental growth and evolution of biotechnology as a sector. Not only does he hold dominion over the more than 200 public company positions held by each of the funds he manages, but he's also influential with other Fidelity fund managers. That likely helps make biotech names more palatable and accessible for those who oversee the more than 580 funds managed by Fidelity. As a whole, the institution has a total of roughly $2 trillion in assets under management.
In addition, Fidelity Biosciences, the private equity life sciences group under parent company FMR, can provide Kaul with a peak into early stage companies before they are public. The venture firm has more than 50 private life sciences companies in its portfolio.
And unlike many mutual funds, Kaul's funds have the capacity to invest directly in private biotechs, an advantage he's capitalized on considerably as more private companies have in recent years taken on crossover investors: firms that don't usually invest in private companies but, on occasion, will buy into the most promising ones that may not be far from an IPO.
Kaul's biotech finance empire has been decades in the making. He's managed both the mutual fund, Select Biotechnology Portfolio ($FBIOX), and the institutional fund, Advisor Biotechnology Fund ($FBTIX), since 2005. He joined Fidelity almost a decade prior to that in 1996 out of consultancy at McKinsey & Co., where he worked after graduating from Harvard University with a liberal arts undergraduate degree. Kaul, who is now in his early 40s, grew up in India, according to a 2013 Barron's profile.
Like many of his peers at the time, Kaul is not an MD or a PhD--although those credentials have more recently come into vogue for biotech portfolio managers as the science within the sector has become increasingly complex.
His broad-based, long-term investment approach makes for strong returns--but perhaps not always as strong as those of some of his fund manager peers who tend to be more selective, precise and impatient with their portfolios. By mid-May, FBIOX had gained 20% for the year so far--with one-year average annual returns of 48%.
Kaul summed up his long-range view of the sector in an article for Fidelity investors that went out last spring during a brief retrenchment for biotech stocks. "In the next 10 years, we could get approximately 500 new companies, in addition to the hundreds we have today. As a result, I'm hopeful there will be many exciting investment opportunities. This industry is at a promising moment of great innovation and great growth--I view it as a golden age for developing breakthrough medications. But investors need to understand that biotech is different from other types of stocks, and investors need to keep a consistent, long-term view."
-- Stacy Lawrence (email | Twitter)
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