Given treacherous market conditions and sagging returns for equities and bonds, Fidelity Investments' newest investment unit — Fidelity Diversifying Solutions — is building out its alternative investment lineup to meet investors' need for more investment diversification to provide better returns.
Demand from institutional, retail and adviser client segments is high given their thirst for performance, said Vadim Zlotnikov, the Boston-based president of the diversifying solutions unit, in an interview.
Fidelity Investments launched Fidelity Diversifying Solutions in October and recently received approval and registration for two mutual funds — Fidelity Global Macro Opportunities Fund and Fidelity Risk Parity Fund — by the Securities and Exchange Commission.
Investment launch dates for the mutual funds and all of the unit's new strategies have not been set.
"Retail and registered investment adviser demand for liquid alternatives is huge. Fidelity is far from the first mover here, but they have the capital and market understanding to make it a success," said Amanda Tepper, CEO and founder of money manager consultant Chestnut Advisory Group LLC, Westport, Conn., in an email.
She noted that "Fidelity is a behemoth on the defined contribution marketplace which is one market segment that remains, for all intents and purposes, structurally closed to any type of illiquid alternatives today. I assume that Fidelity's unit will seek to build products that can work on DC platforms."