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Friday, July 11, 2008

Tsai Dies: Go-Go Era Fund Manager Passes Away

Reported by Erin Kello

There is an old Hollywood legend that stars die in threes. Today the fund industry learned that it may be following that tradition as another fund industry legend passed away.

Following the deaths earlier this week of Sir John Templeton and Eugene Sit two weeks ago, Gerald Tsai, legendary fund manager of the go-go boots era, died Wednesday at the age of 79, his son Christopher told the New York Times.

Gerald Tsai, Jr.
Fidelity Investments & Manhattan Fund
fund legend
Tsai, who was born in Shanghai, China, started down the proverbial path from rags to riches when Edward Johnson, II hired him as a stock analyst for Fidelity in 1952.

Tsai was eventually responsible for starting Fidelity's first aggressive growth fund in 1958. He was one of the first star fund managers at the Boston company. During his time at Fidelity, he was a portfolio manager for the Fidelity Trend, Puritan and Capital Funds as well as for the then-flagship Fidelity Fund.

He achieved his greatest reknown in the late '50s and the '60s. He left Fidelity in 1965 after reportedly losing a succession battle to Edward Johnson, III, the son of then-chairman Edward Johnson, II.

A Second Act

Tsai's second act in the mutual fund business was to create the Manhattan Fund at the urging of his mother in 1965. Shareholders greeted the fund with open arms, putting a then-record $247 million into the fund at its opening.

Tsai and the Manhattan Fund rode the "go go" stock boom until Tsai sold it to CNA Financial for $27 million in stock in 1968. That sale was completed just prior to a bear market that presaged the long dark days of the fund industry that lasted until the 1982 boom. CNA eventually sold the Manhattan Fund to Neuberger Berman in 1979. According to Forbes, Neuberger Berman was interested in the fund's $70 million tax-loss carryforward and not its asset base.

After getting out of the fund business, Tsai masterminded the creation of insurance and mutual fund sales giant Primerica, one of the eventual building blocks of Citigroup.

Tsai relinquished day-to-day management of the firm after Sandy Weill's Commercial Credit Group merged with Primerica. The combined firms formed the basis of Weill's financial services empire that eventually grew to include Citigroup. Tsai remained the largest shareholder of the combined company after his resignation.

Early Years

Born in Shanghai, China, on March 10, 1929, Tsai attended St. John's Middle School and St. John's University in China. He came to the United States in 1947, and, after one semester at Wesleyan University, transferred to Boston University, where he earned a Bachelor of Arts in Economics from the College of Liberal Arts and a Master of Arts in Economics from the Graduate School of Arts and Sciences in 1949.

He began his investment career in 1951 as a security analyst at Bache & Company. He was hired by Fidelity Management & Research a year later.  

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