Fidelity Investments reported record assets under management of $1.384 trillion as of Dec. 31, up 15% from the year before, and revenues of $12.9 billion, up 16%, according to the firm's latest annual report, released today. Net income fell 11% from the year before to $1.184 billion, reflecting, in part, hiring over the past year to accommodate growing business units, including Pyramis Global Advisors, the firm's new institutional asset management unit.
Pyramis ended its first full year as a separate entity with just under $150 billion in assets, up 30% from the year before. Pyramis' fixed-income and international equity strategies accounted for the bulk of the unit's $6.1 billion in net defined benefit inflows for the year, pulling in $4.2 billion and $1.1 billion, respectively.
Fidelity's mutual fund arm, Fidelity Management & Research, had $1.2 trillion in assets as of Dec. 31, up 16% from 2005, with net inflows of $60.4 billion for the year. The healthy gains in overall AUM came despite a lackluster year for several of the firm's leading domestic and international equity retail funds. The relatively weak performance of its two largest domestic stock funds, the $70 billion Contrafund and the $45 billion Magellan fund, left the firm's domestic equity group overall beating 47% of its peers in 2006, down from 60% a year ago. The firm's two largest international mutual funds, the $48 billion Diversified International fund and the $15 billion Advisor Diversified International fund, also stumbled, leaving Fidelity's developed international funds overall beating only 18% of its peers in 2006, down from 83% in 2005. By comparison, the firm's bond and high-income funds remained strong, beating 75% and 79% of their peers in 2006, little changed from the year before.