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Fidelity Investments

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Fidelity Investments
FormerlyFidelity Management and Research Company
Company typePrivate
IndustryFinancial services
Founded1946; 79 years ago (1946) (as Fidelity Management & Research)
FounderEdward C. Johnson II
HeadquartersBoston, Massachusetts, U.S.
Area served
Worldwide
Key people
Abigail Johnson (CEO)
Products
Services
RevenueIncrease US$32.7 billion (2024)
Increase US$10.3 billion (2024)
AUMIncrease US$5.8 trillion (2024)
Owner Abigail Johnson and family (roughly 40%)
Current and former employees (roughly 60%)
Number of employees
77,000 (2024)
Websitefidelity.com
Footnotes / references
[1][2]

Fidelity Investments, formerly known as Fidelity Management & Research (FMR), owned by FMR LLC and headquartered in Boston, Massachusetts, provides financial services. Established in 1946, the company is one of the largest asset managers in the world, with $5.8 trillion in discretionary assets under management, and $15.1 trillion in assets under administration, as of December 2024.[3]

Fidelity operates a brokerage firm, manages mutual funds, provides fund distribution and investment advice, retirement services, index funds, wealth management, securities execution and clearance, asset custody, and life insurance. It offers brokerage clearing and back office support and software products for financial services firms. It also offers a donor-advised fund, Fidelity Charitable, for clients seeking to donate securities. It processes 3.5 million daily average trades. It is one of the largest providers of 401(k) plans and manages employee benefit programs for more than 28,800 businesses.[3]

Abigail Johnson, granddaughter of founder Edward C. Johnson II, and her family and their affiliates own a roughly 40% interest in the company. The remainder is owned by current and former executives.[4][5][6][7]

History

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The Fidelity Fund incorporated in Massachusetts on May 1, 1930, with Edward C. Johnson II serving as president.[8] The corporate structure changed in 1946 and became known as Fidelity Management & Research (FMR).[2]

In 1969, the company formed Fidelity International Limited (FIL) to serve non-U.S. markets and subsequently spun it off in 1980 into an independent entity owned by its employees.[9]

In 1982, the company began offering 401(k) products.[2] In 1984, it offered computerized stock trading.[2]

In 1991, Fidelity launched the first commercial donor-advised fund.[10]

In 1995, Fidelity became the first mutual fund company to offer a webpage.[11]

In 1997, Robert Pozen was named CEO.[12]

In 2001, Geode Capital Management was established to run and incubate investment strategies for FMR. In 2003, it was spun off as an independent company.[13]

In September 2003, the company launched its first exchange-traded fund, the Fidelity Nasdaq Composite Index Tracking Stock Fund (ONEQ).[14]

In 2007, the company changed its legal structure to a limited liability company; FMR LLC became the owning entity.[15]

In 2010, Fidelity Ventures, its venture capital arm, was shut down, and many of the employees created Volition Capital.[16]

In 2011, Fidelity changed the name of its international division from Fidelity International to Fidelity Worldwide Investment and a new logo was introduced.[17]

In 2012, the company moved its Boston headquarters to 245 Summer Street.[18]

In 2014, Abigail Johnson became president and CEO of Fidelity Investments (FMR) and chairman of Fidelity International (FIL).[19] She reduced dependence on open-ended mutual funds, instead having the company focus on financial advice, brokerage services, and venture capital.[20]

In October 2018, Fidelity launched Fidelity Digital Asset Services, a separate entity dedicated to institutional cryptoasset custody and cryptocurrency trading.[21][22]

In August 2018, Fidelity introduced mutual funds with no mutual fund fees and expenses.[23]

In May 2019, Fidelity launched cryptocurrency trading to institutional customers.[24]

In September 2019, Fidelity completed the corporate spin-off of Eight Roads Ventures, its venture capital division. It was known as Fidelity Growth Partners until 2015.[25] In 2018, Eight Roads launched a $375 million European fund.[26][27]

In August 2021, Fidelity announced plans to hire 16,000 employees in 2021,[28] including 9,000 during the second half of the year.[29]

In April 2022, Fidelity announced that it will start offering Bitcoin as an investment option in 401(k) plans to participants whose employers have elected to include it in their plan.[30]

In January 2024, after receiving approval, Fidelity was one of several issuers that launched a spot Bitcoin exchange-traded fund (ETF).[31]

In July 2024, after receiving approval, Fidelity was one of several issuers that launched a spot Ethereum exchange-traded fund.[32]

In April 2025, Fidelity launched no-fee cryptocurrency trading in individual retirement accounts.[33]

Notable mutual funds

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Fidelity has three fund divisions: Equity (headquartered in Boston, Massachusetts), High-Income (headquartered in Boston) and Fixed-Income (headquartered in Merrimack, New Hampshire).[3]

Fidelity Contrafund

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The company's largest equity mutual fund is Fidelity Contrafund, which has $145 billion in assets,[34] making it the largest non-index fund in the U.S. and the largest fund managed by an individual. William Danoff has managed Contrafund since 1990.[35]

Fidelity Magellan

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Fidelity Magellan has $25 billion in assets.[36] Its current manager is Jeffrey Feingold, who also manages the Fidelity Trend Fund. Founded by Ned Johnson in 1963 as the Fidelity International Fund during what Peter Lynch called the "great fund boom", it was renamed the Magellan Fund in 1965. As Lynch recounted, the early sales staff of the Magellan Fund was mostly part-time, traveling employees until the 1973–1974 stock market crash led to a severe decline in interest.[37]

Magellan was managed by Johnson from May 2, 1963, to Dec. 31, 1971, Lynch from May 31, 1977, to May 31, 1990, and Harry W. Lange from 2005 to 2012. Under Lynch's leadership Magellan averaged 29% a year, more than doubling the growth rate of the benchmark S&P 500, and remains the best-performing mutual fund in history over such an extended period.[37][38]

Devonshire Investors

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The company's Devonshire Investors arm is a division that gives the owners of the company the ability to make other investments outside its funds.[39]

Investments include:

Former investments include:

  • Fidelity paid $1.14 billion for Lanoga, the third-largest U.S. professional materials dealer, and $548 million for Hope Lumber, an Oklahoma-based supplier of trusses and other wood products.[44]
  • In 2013, it sold Boston Coach, a limousine and black-car service, founded in 1985 by Ned Johnson after waiting too long for a taxi, to Harrison Global.[45]
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Conflict of interest with employee/owners' personal investments

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Owners and employees of the company are able to invest in pre-IPO startup companies via the company's subsidiary, F-Prime Capital Partners. An investigation by Reuters in 2016 identified multiple cases where F-Prime Capital Partners was able to make investments in shares at a fraction of the price later paid by funds managed by Fidelity Investments. Because of regulations, the funds are not allowed to make the same early venture capital investments as F-Prime Capital Partners. However, the funds allegedly made large investments in companies after they go public in which shares are already owned by Fidelity employees via F-Prime Capital Partners.[47] An example included William Danoff's personal purchase of shares of Alibaba Group for 7 cents each; many shares were later purchased by the fund he manages.[48] While the practice is not illegal, it poses a corporate conflict of interest.[47][49] The same Reuters investigation documents six cases (out of 10) where Fidelity Investments became one of the largest investors of F-Prime Capital companies after the start-up companies became publicly traded. Legal and academic experts said that major investments by Fidelity mutual funds - with their market-moving buying power - could be seen as propping up the values of the investments made by F-Prime Capital, to the benefit of Fidelity insiders.[47]

Document retention fines

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In February 2007, the NASD, a division of the Financial Industry Regulatory Authority, fined four FMR-affiliated broker-dealers $3.75 million for alleged registration, supervision and e-mail retention violations. The broker-dealers settled without admitting or denying the charges.[50]

In 2004, Fidelity Brokerage paid $2 million to settle charges by the U.S. Securities and Exchange Commission that employees altered and destroyed documents in 21 of its 88 branch offices between January 2001 and July 2002. Fidelity has internal inspections every year to make sure it is complying with federal regulations. Management was accused of pressuring branch employees to have perfect inspections and gave notice of the inspections and that at least 62 employees destroyed or altered potentially improper documents maintained at branch offices including new account applications, letters of authorization and variable annuity forms.[51]

Misrepresentations

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In May 2007, NASD fined two Fidelity broker-dealers $400,000 for preparing and distributing misleading sales literature promoting Fidelity's Destiny I and II Systematic Investment Plans, which were sold primarily to U.S. military personnel. As part of the settlement, the FMR affiliates were required to notify Destiny Plan holders who want to increase their investments in existing Destiny Plans that additional shares of the underlying fund can be purchased outside the Destiny Plans without paying the additional sales charges.[52]

Employee stealing

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In 2025, the company was fined $600,000 by the Financial Industry Regulatory Authority for lax supervision after an employee stole $750,000 from the accounts of 37 international clients over an eight year period from 2012 to 2020.[53][54]

Accepting gifts from brokerages

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In December 2006, the company was fined $42 million after some employees accepted gifts from salespeople of Jefferies Group in violation of the company's policies. The firm was fined an additional $3.75 million in February 2007 and $8 million in 2008. Gifts included private chartered flights, tickets to the 2004 Super Bowl, Wimbledon Championships and the US Open tennis tournament; tickets to Justin Timberlake, U2, and Christina Aguilera concerts; and high-end wines such as 1993 Château Pétrus.[55][56][57]

Marketing

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Paul McCartney marketing campaign

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Fidelity has experimented with marketing techniques directed to the baby boomer demographic, releasing Never Stop Doing What You Love, a compilation of songs by Paul McCartney. McCartney became the firm's spokesman in 2005 in a campaign entitled "This Is Paul". On the day of the disc's release, company employees were treated to a special recorded message by Paul himself informing them that "Fidelity and [he] have a lot in common" and urging them to "never stop doing what you love".[58]

See also

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References

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  1. ^ "2024 Annual Report" (PDF). Fidelity Investments.
  2. ^ a b c d "Our Heritage". Fidelity Investments.
  3. ^ a b c "About Fidelity - Our Company". Fidelity Investments.
  4. ^ Gyftopoulou, Loukia (March 22, 2024). "Fidelity's Abby Johnson Tightens Grip on Far-Flung Family Empire". Wealth Management.
  5. ^ "Johnson still Fidelity successor?". CNN. October 28, 2005.
  6. ^ Grind, Kirsten (October 13, 2014). "Abigail Johnson Named CEO of Fidelity Investments". The Wall Street Journal.
  7. ^ "Abigail Johnson". Forbes.
  8. ^ Porter, John Sherman, ed. (1944). Moody's Manual of Investments: American and Foreign. New York: Moody's Investor Service. p. 754.
  9. ^ Newton, Gill (February 16, 2017). "Fidelity Worldwide Investment is going its own way in America". IR Magazine.
  10. ^ Mittendorf, Brian (March 19, 2024). "Donor-advised funds: US regulators are scrambling to catch up with the boom in these charitable giving accounts". The Conversation.
  11. ^ "COMPANY NEWS; FIDELITY TO OFFER SERVICES ON WORLD WIDE WEB". The New York Times. Associated Press. February 15, 1995.
  12. ^ GILPIN, KENNETH N. (April 22, 1997). "2 Executives Get New Posts At Fidelity". The New York Times.
  13. ^ "The story of Geode—Fidelity's low-profile indexing jewel". Retirement Income Journal. February 11, 2021.
  14. ^ "NASDAQ AND Fidelity Unveil Financial Products Based on the NASDAQ Composite Index". Nasdaq. October 1, 2003.
  15. ^ Anantharaman, Muralikumar (November 2, 2007). "Fidelity's parent changes corporate structure". Reuters.
  16. ^ Moore, Galen (January 11, 2010). "Fidelity's venture capital arm breaks off". American City Business Journals.
  17. ^ Pearce, Andrew (June 2, 2015). "Fidelity Worldwide Investment COO exits". Financial News London.
  18. ^ Healy, Beth (November 16, 2012). "Fidelity plans to move Boston headquarters". Boston Globe.
  19. ^ O'Donnell, Carl (October 13, 2014). "Abigail Johnson Replaces Father Edward As CEO Of Fidelity". Forbes.
  20. ^ Frieswick, Kris (August 7, 2018). "Who's Afraid of Abby Johnson?". Boston.
  21. ^ Rooney, Kate (October 15, 2018). "Fidelity just made it easier for hedge funds and other pros to invest in cryptocurrencies". CNBC.
  22. ^ Leising, Matthew (March 24, 2021). "Fidelity Applies for Bitcoin ETF With U.S. Securities Regulator". CNBC.
  23. ^ Shell, Adam (August 2, 2018). "Fidelity offers two index funds with zero fees, escalating a fight for customers". USA Today.
  24. ^ Fitzgerald, Maggie (May 6, 2019). "Fidelity is reportedly about to offer cryptocurrency trading for pros within a few weeks". CNBC.
  25. ^ Butcher, Mike (July 20, 2015). "Fidelity Growth Partners Becomes Eight Roads Ventures, Announces New £150M Fund". TechCrunch.
  26. ^ O'Hear, Steve (March 20, 2018). "Eight Roads Ventures launches new $375M scale-up fund for European and Israeli startups". TechCrunch. Archived from the original on February 20, 2020.
  27. ^ "Fidelity considering demerger of venture arm Eight Roads". The Business Times. June 17, 2019.
  28. ^ Edelman, Larry (August 31, 2021). "Fidelity Investments boosts hiring target to 16,000 for the year". The Boston Globe.
  29. ^ Baer, Justin (August 31, 2021). "Fidelity Wants to Add 9,000 Jobs by Year-End". The Wall Street Journal. ISSN 0099-9660.
  30. ^ Sahadi, Jeanne (April 26, 2022). "Fidelity will soon offer bitcoin as an option in 401(k)s". CNN.
  31. ^ McGee, Suzanne; Lang, Hannah (January 11, 2024). Price, Michelle; Choy, Marguerita (eds.). "The decade-long journey to a US spot bitcoin ETF". Reuters.
  32. ^ McGee; Lang, Hannah (July 25, 2024). Fincher, Christina; Coates, Stephen (eds.). "US spot ether ETFs make market debut in another win for crypto industry". Reuters.
  33. ^ Sinha, Anand (April 2, 2025). "Fidelity's new IRA lets you invest in crypto at no fee". TheStreet.com.
  34. ^ "Fidelity Contrafund". Morningstar, Inc.
  35. ^ Gyftopoulou, Loukia (December 13, 2024). "World's Biggest Solo Stock-Picker Is Having Best Year Since 1991". Bloomberg news.
  36. ^ "Fidelity Magellan". Morningstar, Inc.
  37. ^ a b Lynch, Peter (1994) [1993]. Beating the Street (Revised ed.). New York: Simon & Schuster. pp. 83-84. ISBN 978-0-671-89163-3.
  38. ^ Torrence, Michael (November 1, 2022). "Most of the Magellan Fund's Investors Lost Money".
  39. ^ Leung, Shirley (August 9, 2013). "A heavy loss in Fidelity's pursuit of the perfect tomato". Boston Globe.
  40. ^ DIESENHOUSE, SUSAN (April 9, 2000). "Fidelity: A Major Investor in Real Estate, Too". The New York Times.
  41. ^ Kunert, Paul (August 12, 2015). "Colt shareholders grab Fidelity offer, declare 'we're outta here'". The Register.
  42. ^ Hechinger, John (February 25, 2003). "Fidelity to Give $217 Million To a Number of Top Retirees". The Wall Street Journal.
  43. ^ BARRINGER, FELICITY (September 29, 2000). "THE MEDIA BUSINESS; Fidelity Sells Newspapers To Boston Herald Owner". The New York Times.
  44. ^ Kerber, Ross; Pressman, Aaron (November 5, 2009). Krasny, Ros; =Grenon, Andre (eds.). "Fidelity's ProBuild investment stumbles -- filing". Reuters.{{cite news}}: CS1 maint: extra punctuation (link)
  45. ^ Healy, Beth (May 23, 2013). "Fidelity selling BostonCoach limousine group, launched in 1985 by chairman Ned Johnson". The Boston Globe.
  46. ^ "Builders FirstSource Completes Acquisition of ProBuild" (Press release). Globe Newswire. July 31, 2015. Archived from the original on October 19, 2017.
  47. ^ a b c McLaughlin, Tim (October 5, 2016). "How the owners of Fidelity get richer at everyday investors' expense". Reuters.
  48. ^ "How One Fidelity Fund Manager Made Millions Off Alibaba's IPO for Himself". Fortune. Reuters. October 5, 2016.
  49. ^ Kirkel, Janice (October 14, 2016). "After Fidelity Investments and its owners get blasted by Reuters for alleged high-level conflicts of interest, Morningstar accepts the Boston-based giant's explanation". RIABiz.
  50. ^ "NASD fines four Fidelity broker-dealers $3.75 mln". Reuters. August 10, 2007.
  51. ^ "SEC and NYSE File Settled Action Charging Fidelity Brokerage Services for Violating Federal Securities Laws and NYSE Rules in Connection with Document Alteration and Destruction" (Press release). U.S. Securities and Exchange Commission. August 3, 2004.
  52. ^ "NASD Fines Two Fidelity Broker Dealers $400,000 for Distributing Misleading Sales Literature About Systematic Investment Plans Sold to Military Personnel" (Press release). Financial Industry Regulatory Authority. May 8, 2007.
  53. ^ Rozen, Miriam (January 9, 2025). "Fidelity Failed to Supervise Employee Who Stole $750K From Stock Plan Clients: Finra". AdvisorHub.
  54. ^ Hall, William (March 19, 2025). "Fidelity fined $600,000 over lax supervision that led to account fraud". American City Business Journals.
  55. ^ Moore, Heide (December 22, 2006). "Fidelity pays $42m penalty over gifts". Financial News London.
  56. ^ Moore, Heide (February 6, 2007). "Fidelity fined for accepting gifts". Financial News London.
  57. ^ Anderson, Jenny (March 6, 2008). "Fidelity is fined $8 million over improper gifts". The New York Times.
  58. ^ Abelson, Jenn (September 8, 2005). "Brand on the run: Struggling Fidelity turns to ex-Beatle to lure boomers". Boston Globe.
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Media related to Fidelity Investments at Wikimedia Commons

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