Fidelity To Extend Market Neutral Strategy To Europe

by Philip Morton, Investors Offshore.com

25 July 2001

Fidelity Investments recently announced that it would be extending its US equity market neutral strategy to the UK and Europe, and that there are also plans for a similar Japanese strategy in the pipeline. The company, which is one of the leading lights in the fund management industry, believes that its stategy is unique in that it is based on pure fundamental research and therefore does not have a bias, thus making it truly neutral in comparison to other such funds.

Tim Heffernan, the Senior Vice President of Investments at Fidelity says that true market neutrality is sometimes difficult to find, because unbeknownst to the clients of the fund, there is often a bias in style or market capitalisation. However, Mr Heffernan continued, this only really becomes obvious when a certain style or market cap takes some punishment during market volatility, and the supposedly 'market neutral' fund suffers too.

Fidelity, which has over $650 billion in assets under management world wide, and started running the market neutral strategy ten years ago, is unlike many of its rivals, in that it doesn't consider the long/short process as a hedge fund strategy, but as a flexibility enhacing tool.

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