Fidelity Investments has spun off its Geode Investors division – which uses statistical strategies, including hedging, to invest money for its top executives – into a separate company, Reuters reports. Fidelity divested itself of the unit amid increasing regulator concern that mutual fund companies that also employ hedging tactics raise conflict-of-interest issues if one of their mutual fund managers is betting on a stock while a hedge fund manager is shorting it.

Fidelity will no longer hold any part of the company, but executives will hold minority stakes. Geode is also now becoming subadvisor to Fidelity’s index funds, a move that makes sense as Geode’s president, Jacques Perold, is leaving the firm to continue as head of the spin off, The Wall Street Journal reports. Perold had also overseen all of the firm’s index funds, which have $28 billion in assets under management.

The spin off comes only three months after Fidelity President Abigail Johnson remarked that well-balanced mutual funds, rather than hedge funds or other alternative investments, are a better choice for investors.

Fidelity, which founded Geode two years ago, invested $229 million in its technology, the Boston Business Journal reported earlier this year.

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