Fidelity Investments announced Wednesday that it is starting an investment unit to manage all its non-mutual-fund assets.
The new unit of the Boston fund giant is to be independent of Fidelity Management and Research Co., the mutual fund arm that managed $1.1 trillion of assets at Jan. 31. The new operation, which has not yet been named, will focus on institutional clients.
Edward C. Johnson, Fidelity’s chairman and chief executive officer, said in a press release that the growth of the institutional business, including trust, large 401(k) plans, and institutional services, had forced the company to create the new business.
Anne Crowley, a spokeswoman for Fidelity, said large 401(k) plans, pension plans, retirement funds, separately managed accounts, endowments, and foundations that were managed by Fidelity Management and Research will be moved to the new company within 12 to 24 months.
Some managers that handle institutional accounts will move to the new unit and continue to manage the accounts, she said, and the unit will also hire people to manage institutional assets. Fidelity will hire from outside or designate an executive from within to head the company, she said, and the management of Fidelity’s mutual funds would not be affected.
“Mutual fund managers that manage our mutual funds will continue to” do so, Ms. Crowley said.
Abigail P. Johnson, the president of Fidelity Management and Research, said that it had begun putting together the necessary tools to develop an additional self-sufficient investment management and distribution company.
“These anticipated non-mutual-fund investment activities will be held within a separate investment adviser/subadviser and managed by individuals separate from” her unit, Ms. Johnson said in the press release.
Fidelity said both Mr. Johnson, its founder, and his daughter will be “actively involved” in the new unit’s development until a management team is assembled. Ms. Crowley said this is not unusual.
“Abby heads up the investment management unit, and Mr. Johnson is the chief executive officer,” she said. “They will get this new operation up and running. They are logically involved.”
