Fidelity Investments said its assets under management have grown 9% since the end of 2008 to $1.4 trillion and that combining assets administered, it oversees $2.8 trillion, up 9% in that time.
The company credited the strong results with: diversification into retirement planning, 401(k) administration, employee benefits and open-architecture brokerage; fund performance; and agressive streamlining and cost-cutting. It also noted that its market share of the $9.1 trillion mutual fund industry grew from 11.7% at the end of June 2008 to 12.4% over the past year. Its share of the money market fund business rose to 14.5%, up from 12.7% at the end of 2008.
Also, President Rodger Lawson, 62, said despite the prevailing belief he would not remain long with the company even when he joined two years ago, he “will stay with the company in one role or another for as long as the company needs me, even if it’s 10 years, as long as my health is good and as long as [Chairman Edward “Ned” Johnson III] doesn’t kick me out.” However, he added that he did not foresee still being president at age 72.
After having slashed 3,000 jobs over the past year, Fidelity is not planning any more cuts, Lawson said. He added that he has been spending 12- to 15-year days during the crisis and that Fidelity has “come through this crisis very well, more efficient.”
“Fidelity’s brand has never been more powerful,” Lawson told Bloomberg.
Fidelity said its long-term and money market funds were the top sellers in the first half of the year, attracting $44 billion, narrowly beating out the $43.6 billion Vanguard attracted.
Nonetheless, Lawson admitted that Fidelity’s revenues and operating profit fell 4% and 18%, respectively, to $12.9 billion and $2.36 billion last year and continued to decline in the first half of the year, albeit at a slower rate than competitors. Lawson declined to reveal what this year’s decline has been.
Lawson also told the Associated Press that the company has no plans to enter the exchange-traded fund market even though it has sparked “a lot of debate internally.”
However, Lawson said, while the Johnson family will continue to “be an ongoing feature of the company,” Fidelity’s private structure (the Johnson family owns 49% of the company and key executives the remaining amount) could change. This would mark a major about-face for a company that has always prided itself from being insulated from short-term industry and market whims.
Who will assume the role of the current 79-year-old chairman when he decides to step down “all presupposes how the company is organized,” Lawson said. “There are lots of different ways the company could be organized into the future. I wouldn’t want to show my cards on that one. But whatever the outcome organizationally, we have well-structured succession plan [and have already screened] very strong people” as potential future presidents.
Asked his opinion about the economic recovery, Lawson told Dow Jones he doesn’t see any short-term proof of one but that the international markets will revive ahead of the U.S. “I think we’ll be paying back for the next few years for the largess and the indulgences of the prior few years.”