Fidelity to expand in muni bonds, capital markets

Fidelity Investments plans to increase its presence in the municipal-bond market, firm executives said in an interview.
FEB 26, 2009
Fidelity Investments plans to increase its presence in the municipal-bond market, firm executives said in an interview. “We want to increase the number of negotiated deals, either as underwriters and managers or co-managers of municipal bonds, and we intend to grow that this year,” said Cheryl Dubin Tutun, senior vice president of relationship management and marketing at Fidelity Capital Markets. Boston-based Fidelity participated in 420 deals last year, a 25% increase from the 330 deals in 2007, the firm said. With many municipalities starved for funding, the market is a major growth area, Ms. Tutun said. In addition, tax-exempt investments become more appealing in an environment where higher taxes are expected. And fixed-income trades have been on the rise since the market meltdown. Fidelity saw an 18% increase in average daily fixed-income trade volume last year, over 2007. In the fourth quarter alone, the average daily fixed-income trade volume was up 75% from the fourth quarter of 2007, the firm said. The values of the trades also increased. Fidelity reported a 20% increase in the par value of all fixed-income trades last year and a 122% increase in par value for corporate bonds alone, compared with 2007. “Advisers react to the markets and are making changes in asset allocation,” said Ron Fiske, executive vice president of product development and management at Fidelity Institutional Wealth Services. “The market had people focused on the preservation of capital, which is one of the attributes of fixed income,” he said. “This accelerated a trend that we were seeing in the marketplace.” While muni bonds have rallied in recent months, there could still be volatility ahead, said Miriam Sjoblom, mutual fund analyst at Morningstar Inc. in Chicago. “The biggest risk in the market is more liquidity risk,” she said. “I would expect to see more volatility in the year ahead.” But at least there isn’t much risk of default with munis, Ms. Sjoblom said. “For the run-of-the-mill, general-obligation bond, the instances of default have been very rare,” she said. “For the long-term investor, I think there is value there.” Meanwhile, Fidelity Capital Markets announced plans this week to expand its capital markets division by 20% this year, to a total of 480 people, in order to build its capabilities for equity, fixed-income and prime-brokerage trading. In addition, the company plans to open a trading floor in New York by mid-year, a Fidelity spokesman said. The trading floor in midtown Manhattan will eventually be staffed by 100 traders. The division had an average daily trading volume of 347 million shares of securities as of Dec. 31, the firm reported.

Latest News

Alto to buy Forge Trust from Schwab in self-directed IRA push
Alto to buy Forge Trust from Schwab in self-directed IRA push

Deal creates a $20B-plus custody platform for private market investing in IRAs, months after Schwab closed its Forge Global purchase

Aspen Standard Wealth buys $1B Louisiana RIA Cullen Investment Group
Aspen Standard Wealth buys $1B Louisiana RIA Cullen Investment Group

Cullen marks the fourth firm the New York-based RIA aggregator has bought in 2026 as deal volume heads for a record year.

Strategy before technology: Establishing the foundation for measurable AI value
Strategy before technology: Establishing the foundation for measurable AI value

The quality of AI ROI measurement depends on pre-deployment decisions around business outcomes, leadership alignment, and establishing trusted information, among other factors.

AI investing takes hold far beyond Wall Street, new data shows
AI investing takes hold far beyond Wall Street, new data shows

A state-by-state analysis of retail investor behavior reveals AI-powered research tools are reshaping how clients approach investment decisions.

Advisor moves: LPL lands $1.1B Georgia team as Wells Fargo loses and wins
Advisor moves: LPL lands $1.1B Georgia team as Wells Fargo loses and wins

LPL picks up $1.1B from Wells Fargo's independent channel as the wirehouse gains a $410M family team from UBS.

SPONSORED Built on insurance experience to deliver on long-term promises

Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor