Fidelity adding managers to platform, mulls expansion

The firm has introduced a new fee scheme for Hong Kong retail investors that it may export around Asia, with plans to increase provision of funds from external houses.
Fidelity adding managers to platform, mulls expansion

Fund house Fidelity Worldwide Investment has introduced a new scheme for retail investors on its open funds platform and plans to add at least five more managers to it by the end of this year.

While this pricing scheme is for Hong Kong-based investors only, the firm continues to “explore the possibility of expanding it in other parts of Asia”, says Bruno Lee, regional head of retail for Asia ex-Japan.

Fidelity announced the introduction of its SmartFund Account, allowing HK retail investors to pay a monthly fee based on average asset balance. Previously, clients paid a fee based on the number of transactions they conducted on its FundsNetwork platform.

At present investors can buy and sell among 380 funds from 10 providers on the platform, including AXA Investment Managers, BNP Paribas Investment Partners, Franklin Templeton Investments, Henderson Global Investors, Janus Capital Group, Old Mutual Global Investors, Pimco, Robeco, Schroders IM and Fidelity itself.

Lee notes that Fidelity plans to add at least five more external managers on its open funds platform by the end of this year, bringing the total to 15.

The new pricing scheme allows HK retail investors to buy or sell funds for a monthly account fee based on their average assets – for clients with $1 million or higher, the fee is 0.30% for bonds, equities and other strategies, while clients with between $500,000 and $1 million pay 0.50%. The minimum amount to open an account with Fidelity is $50,000.

“As the investment market becomes more volatile, we see more clients rebalance their portfolios regularly,” notes Lee, saying many do not want to be hindered by paying fees for every transaction.

Fidelity re-hired Lee from HSBC in January 2012, solely for the purpose of bolstering its direct retail business to mass-affluent customers in Hong Kong and Taiwan.

The number of Hong Kong retail investors adding mutual funds to their portfolios is rising, according to the Hong Kong Investment Funds Association. It finds that local retail investors pumped $35.3 billion into mutual funds in the first five months of this year, a 75.6% year-on-year increase.

One fund manager on Fidelity’s platform says that in addition to expanding the number of funds on their platform, Fidelity has undergone a number of upgrades in the past nine months, such as offering clients more online services and risk profile options.

“In my opinion, they are making progress and differentiating themselves,” the fund manager tells AsianInvestor, although adds that Fidelity will likely face increasing competition in Hong Kong amongst distributors in the next few years.

Lee was instrumental in HSBC’s launch of FundMax in May 2010, a scheme to provide unlimited unit trust (UT) transactions and fund switching to Hong Kong retail investors for an annual fee.

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