NEW YORK (MONEY) - For Fidelity Magellan's shareholders, one thing is clear: this is no longer a stodgy index-hugging fund. But though a riskier strategy put into motion late last year paid off initially, more recent performance shows it's far from clear whether the fund can regain its former glory.

Last November, Harry Lange took over as manager of the $50 billion fund, once Fidelity's flagship offering, which for years has failed to beat the S&P 500.

Lange, who has successfully run several other Fidelity funds, jettisoned many of the mega-cap, household name stocks that had been favored by former manager Bob Stansky, such as Intel and Pfizer.

Instead Lange upped the fund's holdings in racier fare, such as Google and Yahoo, as well as energy stocks, including Peabody Energy and Valero. He also increased the fund's international allocation from 4 percent of assets to 25 percent, with stakes in Nokia and Nomura Holdings, among others.

The portfolio makeover resulted in a hefty capital gains distribution for Magellan's shareholders of $22.36 per share, or 18 percent of assets.

At first, the results seemed worth the cost. For the 12 months ending March 31, Magellan gained 15.9 percent, which handily outpaced the 11.7 percent returns for the S&P.

Since the first quarter ended, however, the fund has struggled. "It's been May day for Magellan," says Jim Lowell, editor of Fidelity Investor, referring to the past month's market correction in which the S&P 500 has lost more than 4 percent from its mid-month peak.

Magellan (FMAGX (Research) has lost even more. As Wall Street abruptly shifted away from riskier assets, such as energy companies and foreign equities, Magellan was pounded. During the four weeks ending on May 30, the fund lost a steep 6 percent, landing in the bottom 3 percent of its category.

Year to date, Magellan has gained only 1.5 percent, which is nearly two percentage points behind the S&P.

Fidelity defends Lange's performance. "Since he's taken over the fund, Harry Lange has put his own stamp on it by looking for opportunities wherever they exist," says Fidelity spokesperson Deborah Pont. "He's only managed the fund for a short-time, and our goal is to maintain excellent performance over the long-term."

Dan Lefkovitz, editor of Morningstar's Fidelity fund family report, points to Lange's solid track record in past posts. "He's had great success at smaller funds," Lefkovitz says. "But it remains to be seen whether Lange's skills translate to Magellan's $50 billion asset base." Most recently, Lange managed Fidelity Capital Appreciation, with about $8 billion in assets, and before that, Fidelity Advisor Small Cap.

While new investors might want to hold back for now, current Magellan shareholders should hold on, Lefkovitz says.

After all, the only way to beat the market is to take on greater risks - and Lange is doing just that.

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