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Fidelity creates separate US institutional arm

Fidelity Investments is creating a separate institutional arm separate from its retail mutual funds in the US.

The division of the business is currently only going to affect the North American region of the giant asset manager, although the international company has not ruled out following suit but said it had no immediate plans to do so.

The new institutional investment company will become independent of Fidelity Management & Research, which currently manages mutual funds and is the parent company, the firm said in a statement.

“With the growth of our institutional businesses and the opportunities they present, it makes sense to have a division focused on managing these assets, particularly for Trust, Large 401(k) and Institutional Services Sub-Advisor customers,” said Fidelity chairman and chief executive Edward C. Johnson III.

Abigail P. Johnson, president of the overall group, said Fidelity had begun “the process of putting the necessary tools in place to develop an additional self-sufficient investment management and distribution company.”

The new company will serve corporate and public employee pension and retirement funds, endowments and foundations with commingled pools and separate accounts asset management.

Fidelity manages about $900bn in the US and more than $200bn outside of the country.

Fidelity International’s London-based spokesman said the non-US business had not yet grown to sufficient size to warrant a separate company and confirmed it had no immediate plans to form a similar separate institutional entity.

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