BUENOS AIRES, Argentina - Fidelity Investments opened what is expected to become the first of several Fidelity offices in South America.
The new subsidiary is part of Boston-based Fidelity Investments Institutional Services Co. It will market offshore Fidelity products to Argentine banks, brokers and other institutions. Fidelity already had been doing this without a local presence, but decided to open the office to step up its marketing efforts.
According to Fidelity spokesman Andy Trincia in Boston "we have been selling funds to banks in South America for a few years. But this is the first time we have had an office on the ground there." In Argentina and elsewhere in South America, Fidelity has been selling its Advisor World Funds, a family of offshore funds domiciled in Bermuda. The tax-advantaged vehicles are especially attractive to wealthy individuals.
Beyond Argentina, the company "has plans to open offices elsewhere in the region through this year and possibly into next year," said Mr. Trincia. He would not say where the additional offices will be established.
From Fidelity's perspective, Latin America is "an untapped market with a lot of potential,"he said.There are "a lot of excellent banks in that area that are expanding their business and looking to forge new relationships. Fidelity sees this as an opportunity, since we are already well-established in Europe, Canada and the Far East," added Mr. Trincia.
In Argentina, Fidelity is not the first foreign-based money manager to set up shop. But its arrival has caused a stir in some quarters, especially among local players. Although Fidelity is targeting institutional clients, some fear the company eventually will set its sights on the retail market as well, and gain an edge because of its size and financial muscle. One of the big concerns is that Fidelity would offer funds for smaller investments that could significantly cut into banks' own business.
And at this point, it appears Fidelity easily could get the competitive jump on some local players. Quite a few Argentine banks - especially their branch offices - still focus on promoting certificates of deposit; only about three or four banks aggressively market mutual funds.
But Fidelity's Mr. Trincia denied Fidelity is eyeing the local retail market. "Our customers are the banks, not individual investors. The banks, in turn, sell to individual investors.
"We've had some relationships with Argentine banks already, and we intend to expand this . . . through additional marketing" provided by the new Buenos Aires office, he said.
Although some other foreign-based money managers already have set up shop in Argentina, sources say they, too, appear to be overlooking the local retail market, at least for now.
Donald F. Reed, president of Templeton Investment Counsel, Fort Lauderdale, Fla., said Templeton's Buenos Aires office, set up at least three years ago, has two functions: research for Templeton's emerging markets group and product marketing to financial institutions and to pension funds in Latin America.
To Mr. Reed, regional opportunities are still in their early days, and "there is still a lot of development work going on." But looking forward, managers can expect marketplace success in Argentina to hinge on many of the same factors as elsewhere.
"At the end of the day, people should be using funds they are comfortable with, that they believe can produce a good return, that meets their own measure of risk and that are properly serviced," said Mr. Reed. In light of these criteria, "it doesn't bother us to compete with Fidelity. We do it everywhere," he said.
