BOSTON - Fidelity Investments, the second-largest U.S. mutual fund company, reported a 13 percent increase in operating income last year as the rally in equities boosted assets.
Earnings, excluding costs such as interest and taxes, climbed to $2.6 billion from $2.3 billion in 2012, the Boston-based company said Wednesday in its annual report to shareholders. Revenue rose 7.9 percent to $13.6 billion.
“Higher customer asset levels coupled with product, service and productivity enhancements resulted in impressive performance for Fidelity,” Edward C. Johnson III, chairman and CEO, said in the statement.
While the amount of money Fidelity manages increased, its asset-management unit lost ground to rivals including Vanguard Group Inc. as clients withdrew a net $1.1 billion from its managed products. Abigail Johnson, the chairman’s daughter and president of the firm founded by her grandfather, is expected to announce an internal replacement in the coming weeks for Ronald P. O’Hanley, head of that unit. She said in January O’Hanley will leave the company at the end of this month.
Assets under management rose 15 percent to a record $1.94 trillion, boosted by a 30 percent rally for the Standard & Poor’s 500 Index of U.S. stocks.
In funds and institutional products Fidelity manages, investors pulled $7.8 billion from equities, down from $32.4 billion in withdrawals in 2012. Clients took $19.6 billion from bond products, after depositing $16.3 billion in 2012. Investors fled bonds in 2013 anticipating higher interest rates as the U.S. Federal Reserve prepared to begin reducing monetary stimulus efforts.
edward c. johnson,
mutual fund company,
rally in equities,
record keeper of 401(k) retirement assets