What You Need to Know
- Fidelity is launching a new unit to leverage liquid alts interest.
- In addition to mutual funds, Fidelity Diversifying Solutions plans to offer strategies through traditional LP structures that provide less liquidity to investors.
Fidelity Investments is jumping into liquid alternatives, products that offer regular investors access to hedge-fund like strategies and are raking in billions of dollars amid rising interest rates and increased market volatility.
The money-manager has started a new unit, Fidelity Diversifying Solutions, which is hiring staff and rolling out offerings, according to a statement from the entity’s president, Vadim Zlotnikov. The segment also filed to register two funds at the end of last year, Fidelity Global Macro Opportunities and Fidelity Risk Parity.
“We’ve heard from our clients that they are looking to diversify,” beyond traditional stocks and bonds, Zlotnikov said in the statement. “We’ve explored these areas in the past, but today and going forward we have a strategic commitment to building a world-class alternative franchise.”
Liquid alternatives are registered mutual funds that took off following the financial crisis only to fall from favor as the Federal Reserve’s easy money policies buoyed stocks and other plain-vanilla investments. The sector staged a comeback during the pandemic, adding $29 billion last year and marking the first time since 2015 that inflows exceeded redemptions, according to Morningstar Inc.