Fixed income, balanced and retirement funds are helping Fidelity weather the economic storm, even at a time when the world’s biggest mutual fund firm saw its profits decline 39% last year.

"We have seen very positive sales on balanced funds," Robert Reynolds, Fidelity's chief operating officer, told Reuters. Both last year and so far this year, balanced funds have been Fidelity’s biggest seller, and that is likely to continue into the foreseeable future, Reynolds said. As well, 65% of the firm’s business is money managed for retirement saving, immunizing the firm from the volatility in new fund sales, Reynolds said.

Fidelity attracted $14 billion into bond funds in 2002. It also brought in 3.2 million new accounts last year, bringing the total account number to 54.6 million.

Fidelity’s funds also outperformed 70% of their competitors last year, Reuters notes, although only two of its 59 sector funds secured positive returns for their investors. Excluding the effect of the late 1990 bubble, Reynolds claims a 40% increase in earnings in the four years since 1998.

However, the uncertainty brought by the war, corporate scandals, and the slow economy hit the equity funds across the industry, dragging Fidelity's 2002 revenue down by 9%, and assets under management down by 7%. The firm laid off 5%, or 2,300 jobs, last year.

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