BOSTON -- One of the biotechnology sector's worst two-week declines in the past decade has clobbered one of Fidelity Investments' hottest funds.
The $9.4 billion Fidelity Select Biotechnology Fund plunged 11.75 percent during the first 14 days of April. That put the fund near the bottom among nearly 3,800 U.S. mutual funds tracked by Lipper Inc. Only six funds performed worse, but they had less than $100 million in assets each.
It's a jarring reversal of fortune for Fidelity portfolio manager Rajiv Kaul, whose three-year return has averaged 31 percent, beating his benchmark by a whopping 21 percentage points over that time.
Kaul has built up an outsize bet on Gilead Sciences Inc over the past two years. It is the fund's largest holding at 13 percent of assets, but it is down 9 percent in the past month amid a backlash over the high cost of its $84,000 hepatitis C drug. Kaul was not available to comment.
U.S. biotech funds fell an average of 7.25 percent during the first half of April. In comparison, that sector's returns have been better nearly 99 percent of the time on a rolling two-week basis during the past decade, said Jeff Tjornehoj, head of Lipper Americas Research.
Biotech's swift downturn was part of a broader sell off of Internet and software stocks that hobbled some of the U.S. mutual fund industry's best stock pickers. Gold funds beat all comers as the $1.3 billion First Eagle Gold Fund led with a nearly 5 percent gain in the first half of April, according to Lipper.
Fidelity portfolio manager Will Danoff, who runs the behemoth $109 billion Contrafund, also got walloped in recent weeks probably because he had loaded up on shares of Netflix Inc and Workday Inc over the past year.
Contrafund had holdings in these companies at the end of February, and gave no indication of any major changes in his portfolio, according to portfolio commentary released on Wednesday by Fidelity.
Contrafund is down 4 percent over the past two weeks. But Danoff, who has a strong long-term record, has had far worse moments as a portfolio manager.
During a two-week stretch in 2008, at the height of the financial crisis, Contrafund tanked, declining 23 percent, Tjornehoj said. Danoff, who was not available to comment, has beaten 94 percent of his peers over the past decade.