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Special Report

Play Me or Trade Me: Fund Manager Free Agency

If it seems that mutual-fund managers are switching allegiances almost as rapidly as your favorite football players, don't worry--it's not just your imagination. In fact, like athletes, who agitated for free agency only after professional sports had become a hugely profitable, media-driven industry, fund managers have taken advantage of the explosion in mutual-fund investing and financial-media coverage to write their own tickets to stardom.

Nor is it just Fidelity anymore, where both the celebrity manager (see Peter Lynch) and heavy managerial churning have been de rigeur for years. (It's appropriate, though, that one of 1997's first high-profile signings was that of Warburg Pincus Growth and Income's Brian Posner, formerly of Fidelity Equity-Income II.) Across the board--at tiny boutique firms and large industry stalwarts, at companies renowned and reviled, at white-shoe traditionalists and cheeky upstarts--manager defections are the rule now, not the exception. Some fund companies have tried to counter the trend by reverting to the team system, emphasizing their deep pools of research analysts, or claiming that teams had been in place all along, though a star manager (whom the fund may have featured in ads) had been hogging the credit.