Fidelity Profit Rises 20% to $1.3 Billion in 2005

Fidelity Investments reported new profit of $1.3 billion in 2005, up 20% from $1.1 billion in 2004, according to reports. It was the second-most profitable year in firm's 60-year history.

Funds that Fidelity manages fell 46% to $17.4 billion, primarily due to net outflows of $6.8 billion, the Associated Press reports. However, funds for which Fidelity acts as a custodian in brokerage and retirement accounts rose 17%, helping to boost Fidelity's total assets by 9%, to $1.2 trillion. Fidelity has not been delivering strong performance in its mutual funds in recent years, according to the AP, which may be a reason its investment management assets are languishing.

"Seeing $6.8 billion go out the door not only means their best revenue stream has diminished," John Bonnanzio, group editor of the newsletter Fidelity Insight told AP, "it also means they're losing market share to the competition."

Excluding money market funds, Fidelity took in $6.88 billion in net new flows in 2005, a paltry sum when compared to the $78.8 billion that American Funds reaped and the $45.6 billion that Vanguard took in.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.