Fidelity swamps rivals to defy downturn for funds
By DUNCAN HUGHES
FIDELITY Investments is claiming the crown of industry leader after figures yesterday showed its sales over the first nine months of the year topped the rest of the industry combined.
The company believes its telephone support system and a distribution network through 14 banks has helped it defy the market downturn.
According to the Hong Kong Investment Funds Association, industry-wide net sales of unit trusts slumped 79 per cent between January and September as investors sought alternatives to a volatile stock market.
Gross sales topped US$3.15 billion while redemptions were about $3.05 billion, leaving a net inflow of about $94 million.
Fidelity said that during the same period its domestic sales grew by 65 per cent to $300 million, and net sales rose by 35 per cent to $130 million.
This week, the president of Fidelity International, Barry Bateman, said he was confident the company's administrative and proposed touch-phone customer services should ensure that it maintained the competitive edge, particularly over its arch-rival Jardine Fleming.
Regional marketing director Richard Wastcoat said: 'Several factors have contributed to this success, including consistent investment performance and delivery of a high level of service to both our investors and banks which distribute the funds.' The company has an investor telephone service running from 9 am to 9 pm, six days a week, and a bank distribution network that includes Hang Seng Bank and Chase Manhattan.
The company doubled the number of banks offering its products over the past 12 months and its products are available through more than 300 branches, the largest distribution channel developed by any fund company in the territory.
The advantage for banks is in offering an alternative product line for customers.
In addition the company uses intermediaries and off-the-page advertising.
The company has spent about $20 million on a sophisticated new computer system that will improve its administrative and dealing services for Asia, Europe and Britain.
Customers will increasingly be able to complete their transactions by phone.
In the United States, about 68 per cent of clients calling the company use the automated option rather than talking to a company representative.
It is about 90 per cent in Taiwan and 50 per cent in Hong Kong.
The company has about $10 billion under management in Hong Kong and $30 billion in the region.
Chief investment officer William Ebsworth said: 'To support this asset growth, we have built a team of around 25 investment professionals in Hong Kong, one of the largest in the territory.' The company said its Asian Special Situations Fund raised about $35 million during its three-week offer period. Its other launch this year, a Latin American fund, raised between $10 million and $15 million during the launch period. The record raised during a unit trust launch is about $200 million.
Investors flooded into unit trusts during the first quarter as the stock market soared to record highs but the rate of increase more than halved over the following six months.
Over the first quarter, total sales fluctuated between $400 million and $800 million, which was in line with sales in the final quarter of 1993. But over the next six months the monthly inflows shrank to between $170 million and $300 million.