Fidelity takes change in stride

Most fund managers would view the loss of almost $2 billion in investment mandates as a serious blow to their egos, not to mention the likely hole left in the corporate wallet. However, this was not the case for Fidelity Investments following the recent annulling of its exclusive alliance with Perpetual Investments.

According to Fidelity managing director Michael Ohlsson, the general consensus in the market was that Perpetual terminated its agreement with Fidelity, however, he says this was not the case.

“The fact is that 12 months ago we did not renew the agreement, and at the time Perpetual was ready to sign a renewal,” Ohlsson says.

Perpetual Investments managing director Gerard Doherty says private discussions did take place a year ago at which a number of contract changes were proposed, but the two groups were unable to reach an agreement.

However, both Doherty and Ohlsson stress that the groups retain a very strong professional relationship and there is no animosity between the organisations.

“It’s an amicable parting rather than an acrimonious divorce, let’s put it that way,” Ohlsson says.

According to Ohlsson, one of the things people are saying to him is that the group must be disappointed over losing $1.9 billion in business and revenues.

“Actually we’re delighted as we’ve been moving towards this for the whole of the calendar year. Our initial strategy was to access the retail market using Perpetual’s distribution, but we now have a good institutional business here and are committed to hiring the resources to make our own push into the retail space,” he says.

Ohlsson says “the writing was on the wall 12 months ago” when Fidelity launched its own Australian equities capabilities and reassigned London-based senior analyst Paul Taylor.

The group also appointed three portfolio managers to kick-start the local operations.

“If anybody had taken a look they would have seen the relationship with Perpetual was not going to last.

“It was clear it wouldn’t have made sense to have Perpetual BDMs [business development managers] out in the market selling our international equity funds and our BDMs talking to planners about Australian equities. From a planner perspective, it would have looked a bit strange,” he says.

The group will look to put a retail business development management team on the ground in Sydney and Melbourne to target planners, platforms and research houses, Ohlsson says.

In terms of the new products the group will roll out next year, Ohlsson remains largely tight-lipped but says that the offerings will be local versions of funds available overseas, such as Fidelity’s offshore fixed interest products.