Fidelity profit hits record even as assets fall

Fidelity profit hits record even as assets fall
The mutual fund giant's assets under management fell 1% last year, but its revenue rose 12%.
FEB 21, 2019

Fidelity Investments posted record revenue and operating income in 2018 even as assets under management fell for the first time in seven years. The mutual fund giant reported outflows from its actively managed stock funds — once its most well-known business — while seeing gains in its index products, according to the closely held company's annual report released Thursday. CEO Abigail Johnson noted the impact that the rough markets had on the company. "For the first time since 2011, the stock and bond markets did not boost the levels of Fidelity's managed and administered assets," she said in the report. Assets under management last year were $2.4 trillion, down 1% from 2017. Fidelity, Charles Schwab Corp. and Vanguard Group Inc. are dueling to win investors by offering commission-free ETFs and slashing fees on other funds. Fidelity's new zero-fee funds, first introduced in August, had net asset flows of $2.9 billion through the end of 2018. "When I look at today's financial services landscape compared with 30 years ago, the number of investment products and services available to individuals at very low cost, or no cost, is extraordinary," Ms. Johnson said. (More: Q&A with Abigail Johnson and Kathleen Murphy of Fidelity Investments)​

Digging deeper

Fidelity's actively managed equity products saw net redemptions of $53.2 billion. Revenue rose 12% to a record $20.4 billion. Operating income advanced 19% to a record $6.3 billion. Fidelity's mutual funds beat 66%, 72%, and 76% of their peers for the trailing one-, three- and five-year periods, respectively. This compares with 78%, 77% and 76% for the same timeframes in 2017. (More: The race to zero fees may be reaching its natural limits)​

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