Fidelity Investments : Fidelity has no plans to enter the hedge fund market in near future
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Fidelity Investments Says it Has No Plans for Hedge Funds

Fidelity Investments has no plans to enter the hedge fund retail marketing business, such disclosure was made by Robert Reynolds, the vice chairman and investment officer for Fidelity. According to Mr. Reynolds, running mutual funds and hedge funds under one roof may create a conflict of interest he explained. Reynolds said, "We have elected not to provide those types of funds, and we don't see that changing in the near future".

Fidelity mutual fund managers move over to hedge fund management

Fidelity Investments wants to avoid such conflict according to Reynolds, but he acknowledged that some Fidelity’s investors are asking for such strategies. Many veteran mutual fund managers are increasingly moving over to hedge fund management [ previous story] Fidelity has also lost some of its best mutual fund managers and analysts to the Hedge fund industry. David Glancy, one of the best stock analysts at Fidelity, and John Muresianu have left Fidelity and now run their own hedge funds.

Reynolds said Fidelity would not stop its mutual fund managers from moving over to hedge fund management by creating its own hedge funds, "We want to try to avoid those conflicts”, Reynolds said.

Differences between Hedge Funds and Mutual Funds

Some of the differences between hedge funds and mutual funds include investment strategies and philosophy. Hedge funds operate in loose regulatory environment, and use many investment strategies such as stock shorting techniques to trade, while mutual funds are regulated by the SEC, and generally rely on “buy and hold strategies” for trading purposes.

Hedge funds are growing faster than mutual funds, but the overall assets of mutual funds, [about$ 7.5 trillion] dwarf those of hedge funds [about $800 billion]. While Fidelity Investments is not interested in running hedge funds, other mutual funds have not categorically ruled out hedge funds, some are studying ways to accommodate hedge funds and still maintain its core mutual fund business. Meanwhile the Securities and Exchange Commission continues to investigate the recent mutual fund/hedge fund trading scandals; such investigations may ultimately lead to new regulatory oversight for both industries.

Paul Oranika
Editor-in Chief

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