2013 was a very good year for the brokerage sector, in particular discount brokerages. Discount broker and asset manager Fidelity investments reported full-year 2013 results today and profits were up solidly despite continued net outflows from stock assets under Fidelity management. The company reported that operating income from its financial services business increased by 13% to more than $2.6 billion.
Despite profits, significant outflows continue
Despite enjoying a profitable year, Fidelity suffered another $7.8 billion in outflows of total stock-product assets under management in 2013. This comes on the heels of more than $32 billion in stock asset outflows in 2012. It is particularly perturbing to lose assets under management in a year when inflows into U.S. equity markets totaled more than $172 billion.
What does value investing really mean? Q1 2021 hedge fund letters, conferences and more Some investors might argue value investing means buying stocks trading at a discount to net asset value or book value. This is the sort of value investing Benjamin Graham pioneered in the early 1920s and 1930s. Other investors might argue value Read More
Bright spots included the financial giant’s managed account offerings, which enjoyed strong inflows of $17.7 billion last year. Fidelity’s managed asset allocation strategies also saw an additional $9.2 billion in new customer money in 2013.
It should be noted, however, that Fidelity’s total customer assets under management ended 2013 at $1.94 trillion, up around 15% for 2013, in large part due to significant stock market gains.
Becoming more than a “mutual fund company”
A Wall Street Journal article quotes Fidelity spokesman Vincent Loporchio as saying that while Fidelity is best known for investment management, the company has grown to become “much more than a mutual fund company.” He also highlighted that Fidelity’s total assets under administration, including all managed products, brokerage accounts and other money invested through Fidelity, were up 19% to $4.6 trillion at year end 2013.
Strong returns for Fidelity managed funds
It is somewhat surprising Fidelity suffered these substantial asset outflows as most of its actively managed funds had good returns last year. On average, Fidelity’s portfolio of equity funds outperformed 68% of their peers in 2013, compared to 74% in 2012. The company’s investment-grade bond funds had higher returns than 62% of competing funds in 2013, compared to 42% in 2012.