Fidelity Earns $3.4B
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Tuesday, February 17, 2015

Fidelity Earns $3.4B

2014 was a good year for Fidelity's [profile] bottom line, but not for its flows.

Bloomberg, the Boston Globe, the Financial Times, Reuters, and the Wall Street Journal all reported last week on the Boston Behemoth's freshly released shareholder update for last year, the first such report since Fidelity scion Abby Johnson officially took the CEO reigns in October.

Fido's operating income boomed by 29 percent to a whopping $3.4 billion, and revenue climbed nine percent to $14.9 billion. Assets under management rose four percent last year to $2.03 trillion, while assets under administration increased by 10 percent to $5.06 trillion, all in a year when the S&P 500 rose 11 percent. The 401(k) titan's retirement assets under administration climbed to $1.46 trillion, thanks in $42 billion in net inflows, and to 25 million participants.

All three publications note that Fidelity's active equity funds took a hit last year, suffering $16 billion in net outflows despite solid investment performance. Yet its bond funds brought in $2 billion in net inflows, and its sector products (which include ETFs) brought in $6.6 billion. $13 billion net flowed out of Fidelity's money funds. All told, $6 billion net flowed out of Fidelity's "discretionary products."

"If Fidelity were Vanguard, if their revenue was monolithically dependent upon revenue generated from just the investment products it sells, it would be in a more difficult position than it is as conglomerate," Jim Lowell, editor of the Fidelity Investor newsletter, tells Reuters. "Fidelity is very diversified, as a result it can offset any potential weakness in specific product sales with success in other areas."

Fidelity claims that, with $152 billion in index mutual fund assets under management, it is now the second largest passive mutual fund shop, presumably behind only Vanguard.

On the performance side, under asset management president Charles Morrison Fidelity's active mutual funds have beaten 66 percent of their peers over the last year, 70 percent over the last three years, and 68 percent over the last five years. The Boston Behemoth now claims to have more four- and five-star rated mutual funds (per Morningstar) than any other fund family.

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