Three Big Players Stay Strong in 2006-2007

Sales of the Vanguard FTSE All-World ex-U.S. Index Fund began in early March. The fund invests in large- and mid-cap stocks of companies in 47 foreign countries, including Canada. Its investor shares have an estimated expense ratio of 0.40 percent, while its institutional shares and ETF shares have estimated expense ratios of 0.15 percent and 0.25 percent respectively.

Fidelity, which analysts say has been “bulking up” its research staff, has seen strong growth in its target-date or Freedom Fund lineup. Assets in these funds sold via advisors nearly doubled in 2006 to $4 billion, up from $2.3 billion in 2005. Assets in the funds sold directly by Fidelity to individual investors grew to $60 billion in 2006 from $41 billion in 2005.

“The growth of these funds has just been tremendous,” shares Craig Huntley, executive vice president of Fidelity Investment Institutional Services. “Starting in 1996, we began distributing them directly to consumers … and then in 2003, they began being sold through advisors. And now, in the aggregate, we have more than $64 billion of assets in these funds. It’s a very important product for us.”

“Retirement leadership is also a very significant focus for us,” Huntley continues. “This is about taking people from the savings or accumulation into the distribution phase. It’s an area where we see a great need in the marketplace … We have 190 individuals who serve as educational resources to advisors and others, including their customers. We are trying to bring value to the marketplace to help professionals grow their business. It’s about doing more than providing products.”

FRC’s data put each of the largest players at under $1 trillion in terms of assets, excluding funds of funds, though other industry sources say Fidelity has some $1.4 trillion in total assets and Vanguard $1.1 trillion.

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Janet Levaux is the managing editor of Research; reach her at [email protected].