Fidelity marks record operating profit of $3.5bn for 2016

Fidelity, the privately-owned US financial giant, made a record operating profit of $3.5bn last year, according to its latest annual report, which underscored how the company has moved far beyond its historical business of actively-managed mutual funds.

While Fidelity eked out $9.3bn in flows into the products its manages by itself, it was able to boast $209.6bn of flows into the pension plans and retail brokerage accounts that it administers, which also include other companies’ funds.

In all, the company’s assets under administration jumped 10.6 per cent to $5.7tn, of which $2.13tn is managed by Fidelity itself. Revenues across the company were $15.9bn, up 3.4 per cent on 2015, while operating profit rose by 19.5 per cent thanks to tight cost controls — a reversal of 2015, when hiring new staff and investments in technology squeezed margins.

The company said that at the end of December, it serviced 27.5m defined-contribution pension plans and 8.9m retail brokerage accounts, increases of 6 per cent and 6.8 per cent, respectively. Its traditional asset-management business, however, continued to struggle against the trend for investors to move out of stock-picking funds like those at Fidelity to index trackers.