Fidelity operating income surges on stocks rally

Feb 12, 2014 @ 1:38 pm (Updated 1:38 pm) EST

Bloomberg News

Fidelity Investments, the second- largest U.S. mutual fund company, reported a 13% increase in operating income last year as the rally in equities boosted assets.

Earnings, excluding costs such as interest and taxes, increased to $2.6 billion from $2.3 billion in 2012, the Boston- based company said Wednesday in its annual report to shareholders. Revenue climbed 7.9% to $13.6 billion.

“Higher customer asset levels coupled with product, service, and productivity enhancements resulted in impressive performance for Fidelity,” Edward C. Johnson III, chairman and chief executive officer, said in the statement.

While the amount of money Fidelity manages rose, the firm lost ground to rivals including Vanguard Group Inc. as clients withdrew a net $1.1 billion from its managed products. Abigail Johnson, the chairman’s daughter and president of the firm founded by her grandfather, is expected to announce an internal replacement in the coming weeks for Ronald P. O’Hanley, head of the asset-management unit. She said in January that Mr. O’Hanley will leave the company at the end of this month.

Assets under management rose 15% to a record $1.94 trillion, boosted by a 30% rally for the Standard & Poor’s 500 Index of U.S. stocks.

Assets under administration, which includes the money Fidelity oversees as a record keeper for retirement plans and for independent financial advisers, jumped 19% to $4.62 trillion. Clients added $126.9 billion to administered assets. Fidelity is the largest record keeper of 401(k) retirement assets in the U.S.

(Bloomberg News)

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