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'Don't give away alpha': Fidelity stands firm on fund pricing
by Robert St George on Oct 22, 2013 at 07:42
He added that, with rivals to Fidelity’s FundsNetwork such as Skandia taking the restricted approach, choice was being further constrained. ‘There are lots of our competitors who don’t deliver good customer outcomes,’ said Mullan.
Fidelity’s platform, he insisted, would remain ‘completely independent and not commercially biased’.
Mullan maintained that this had not changed following his meeting with around 80 fund houses on 9 October. At that session, Fidelity unveiled a new programme it is calling Access.
Under this scheme, Fidelity is promising participating asset managers enhanced marketing support – such as inclusion in investor events – in return for access to the cheapest share classes they have made available.
Fidelity has stressed, however, that fund groups opting out of Access will not have their ranges downgraded in any way and emphasised its commitment to its ‘open architecture’ model.
A central component of this is Fidelity’s ambition to expand its product range. ‘As a distributor, we realise we won’t perform in all assets at all times,’ Mullan acknowledged. His next steps to plug gaps in the Fidelity suite will entail doubling its number of tracker funds, with a focus on emerging markets and Asia, and the rollout of more enhanced income products, which employ covered calls to boost dividends.
‘Fidelity is a pragmatic organisation,’ stated Mullan. ‘Our platform should offer the products that customers want. If you don’t offer them a component of what they want, you will lose them to competitors.’
Equally, Mullan expressed confidence that Fidelity would not start losing its star managers to competitors. ‘Managers like working here,’ he observed, stressing their autonomy, access to Fidelity’s analytical resources and distribution capabilities, and the fact that most are shareholders in Fidelity, a private company.
Mullan contrasted Fidelity’s recent experiences in succession planning with those of other houses. Schroders, for instance, has shed almost £2 billion from its UK Alpha Plus fund since the hurried announcement of Richard Buxton’s departure.
Fidelity has arranged a transition period of almost a year on the China Special Situations investment trust ahead of Anthony Bolton’s retirement, and four months for Citywire Selection manager Allan Liu as he steps down from Fidelity South East Asia to focus instead on its Luxembourg-domiciled equivalent. ‘We’re willing to take those sorts of decisions that harm P&L but are ultimately good for the business,’ commented Mullan.
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by Danielle Levy on Dec 12, 2013 at 09:03