Zweig on Ned Johnson & MMFs
A recent Jason Zweig "The Intelligent Investor column in The Wall Street Journal briefly discusses "Ned Johnson (1930-2022)." He comments, "Earlier this month, Edward C. Johnson III, who built Fidelity Investments into a financial colossus, died at age 91. Along with Charles Schwab and the late Jack Bogle of Vanguard, Ned Johnson was part of the pioneering triumvirate who offered ordinary people a seat at the investing table, where traditionally only the rich had been welcome. Above all, he understood that three things would attract investors: people, performance and price. Fidelity relentlessly promoted its fund managers by name and face: Peter Lynch in the 1980s, Jeff Vinik and a host of others in the 1990s were ubiquitous guests on financial TV and cover boys for personal-finance magazines." Zweig tells us, "In a marketing masterstroke, as interest rates were shooting up in 1974, Ned Johnson pushed cheap money-market mutual funds. They appealed to investors who were afraid of stocks but disgusted by the low rates on bank accounts. Fidelity's Daily Income Trust paid upwards of 9% at a time when bank deposits yielded 5.25%. That December, when the Federal Deposit Insurance Corp. said it would cover balances at the Fidelity fund, Ned Johnson was ready. The very next day, Fidelity ran this ad in The Wall Street Journal: 'Learn how your investment in our money market trust is now insured by the FDIC'" He continues, "Money poured in, helping Fidelity survive the bear market in stocks that lasted into the early 1980s. Mr. Johnson was obsessed with the Japanese principle of kaizen: continuous gradual improvement and attention to detail. Not much escaped his attention: He even had the shrubs at one of Fidelity's facilities replanted in random clusters to look more natural."
