Fidelity Sees 28% Asset Increase in '03

January 13, 2004 ( - Fidelity Investments' assets under management increased 28% in 2003.

With the rise in assets under management, spurred by not only a rebounding equity market but also increased sales in mutual funds, Fidelity managed $988.3 billion as 2003 drew to a close.   By comparison, assets at Boston-based Fidelity rose faster than the Standard & Poor’s 500 Index, which gained 26%, according a Fidelity spokesman cited by Bloomberg News.

Before 2003’s gain, Fidelity had experienced two years of net outflows from its US mutual funds.   However, Fidelity was the third-best-selling fund company through the end of November 2003, data compiled by Financial Research Corp (FRC) shows (See Domestic Equities Still Leading in November Fund Flows ).   Investors deposited a net $26.5 billion in Fidelity funds in the first 11 months of the year, trailing only American Funds and The Vanguard Group.   By comparison, Fidelity’s funds attracted only $9.4 billion in the same period of 2002.

Investors returned to Fidelity’s funds last year as the stock market reversed three years of losses. During the year, the company eliminated sales fees on many of its funds.   Perhaps most important to Fidelity investors was Fidelity’s absence during the ongoing regulator probes into late-trading and market-timing activities at many mutual fund companies (See Keeping Up with the Trading Scandal ).   Among some of the firms that have been caught in the fray:

  • Putnam Investments, which agreed on November 13 in a pact with the US Securities and Exchange Commission (SEC) to institute new employee-trading controls (See  Putnam, SEC Reach Securities Fraud Settlement ), saw assets plummet $13 billion in November and $2.28 billion in October.
  • Strong Capital Management, whose founder and former chairman, Richard Strong, admitted to improper trading in company funds (See Trading Probes Muscle Out Strong, Putnam Chiefs ), had $1.6 billion in net outflows from company funds in November.
  • Alliance Funds, which agreed to pay $250 million in penalties and restitution for allowing market timers, lost $786 million in the same month (See  Alliance, Regulators Reach Settlement ).