GERMANY - Fidelity Investments says it is to launch a German investment company, known as a KAG, from January 2005 to create German-domiciled funds for institutional and retail investors.
Fidelity spokesman Jörg Allgäuer said Fidelity was currently awaiting approval of its KAG from the German regulator BaFin, adding that it would likely come by January 2005.
According to Allgäuer, Fidelity’s KAG plans to roll out an array of equity, bond and balanced mutual funds domiciled and administrated in Germany. “Alternative investments also may be on offer, but I would rule out our unveiling hedge funds for the German market,” he said.
Prior to the advent of a KAG, Fidelity had been offering Luxembourg-based funds to German institutional and retail clients. It currently manages 1.3 billion euros in assets for institutional clients and another 8.9 billion euros for retail clients.
The move reflects the US fund provider’s fast-growing ambition for Germany, especially where its institutional market is concerned. Industry sources said that in the mid-term, Fidelity was expected to begin offering German institutional funds, or Spezialfonds, through its KAG.
Allgäuer also said that following the KAG’s launch, Fidelity would offer a range of investment products for the German pensions industry, including possibly contractual trust arrangements (CTAs).
Last April, Fidelity hired Klaus Mössle from Deutsche Asset Management. Mössle currently leads a team of five experts and will act as one of the managing directors of the KAG.
As a result of its first real foray into Germany’s institutional market, Fidelity expects to grow its institutional business by 20-30% annually.