Fidelity’s Mutual Fund Assets Shrink 4.9%, Mirroring Customers’

“ETFs are beginning to eat everyone’s lunch in this industry,”

May 4 (Bloomberg) — Fidelity Investments, the world’s largest mutual fund company, has one thing in common with some of its customers: it has less money in stock and bond funds than it did a decade ago.

Fidelity’s long-term assets fell 4.9 percent to $521 billion at the end of March, according to Financial Research Corp., a Boston-based company whose data excludes money-market funds.

“A lot of their funds have had middling performance and that turns people off,” said Russel Kinnel, director of mutual fund research at Morningstar Inc., a Chicago-based company that tracks the industry……

……ETF Specialists

Two other companies that gained market share, Barclays Plc, and State Street Corp., are first and second in exchange-traded fund assets, according to data from State Street. Exchange- traded funds mimic indexes such as the S&P 500. In April, Barclay’s agreed to sell its ETF business, known as iShares, to CVC Capital Partners Ltd. for $4.4 billion.

Lowell, in his newsletter, had urged Fidelity to bid for iShares. “ETFs are beginning to eat everyone’s lunch in this industry,” he said in an interview. Fidelity has $65 million in exchange-traded funds, according to State Street. Vanguard has $40 billion in them.

At Fidelity’s former flagship, Magellan, assets have dwindled to $18.6 billion, Bloomberg data show. Performance has perked up this year: Through April 29, the fund rose 9.9 percent.

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