Reuters – Fidelity Investments’ Harry Lange, manager of its one-time star Magellan fund, made what now looks like a poorly timed move in June: he nearly doubled his holdings of AIG.

Lange, who has already seen other financial bets sour, driving the $35.2 billion (19.6 billion pound) fund down 17.3 percent since July, may be just one of several fund managers to get burned by American International Group Inc’s meltdown.

Though it’s unclear where Magellan’s holding stood when the government launched its $85 billion government bailout of the giant insurer on Tuesday, Lange in June boosted the fund’s holdings of AIG to $865.1 million from $475 million in May.

And that was just a piece of the substantial 5.81 percent stake, or 156 million shares, held by Fidelity, the world’s biggest mutual fund company, as of the end of June, according to Reuters data.

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Reuters- Some of the best known U.S. fund firms probably suffered significant losses in last week’s meltdown in the stocks of mortgage finance agencies Fannie Mae and Freddie Mac.

Among the casualties may be the one-time star stock-picker Bill Miller at Legg Mason, whose funds have owned a series of companies that have been battered by the credit crisis and the weakening economy.

Others include Capital Group, including its Growth Fund of America, which is the largest U.S. fund, AllianceBernstein, and Fidelity Investments.

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Baltimore Sun- Mutual fund companies come up with "new ideas" all the time, but most don’t gain any traction.

So when Fidelity Investments joined the latest trend this month and opened a "130/30 fund," it signaled that the newest fad in funds had gone big-time.

The question is whether this new flavor of funds has any role in the average investor’s portfolio, because the new genre of funds comes with hype about how an option resembling a hedge fund can provide added diversification and protection against a down market.

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