Fidelity® Launches Personalized Managed Account Service that Provides Daily Tax-Sensitive Investment Management

BOSTON, Jan. 12, 2011 /PRNewswire/ -- Fidelity Investments®, one of the world's largest providers of financial services and the No. 1 provider of mutual fund advisory programs(ii), today introduced a new unified managed account (UMA), Fidelity® Personalized Portfolios, which provides a daily tax-sensitive investment management solution and other key features.  This service offers affluent investors, who are navigating an increasingly complex investing environment, a single diversified portfolio that can be personalized to meet their individual needs while at the same time optimizing risk management and after-tax returns.

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Investor demand for professional management and tax-efficient investing is growing.  Fidelity Personalized Portfolios represents a significant evolution in portfolio management by offering daily risk management and tax-sensitive investing previously reserved for institutional investors.  The new service offers portfolios that invest in a wide range of carefully selected investments that are personalized based on the client's goals, risk tolerance and personal situation.

According to a recent Fidelity survey(iii) of affluent investors, among those who own a UMA, nearly half (48 percent) chose it because they had an increase in wealth and wanted to reduce the complexity of their portfolios, or address their significant investment-related tax obligations.  To this point, 28 percent of those surveyed said taxes was one of their most urgent household concerns.  Additionally, 39 percent of these investors said they aren't sure where to invest to get a good return and not lose money.

Morningstar cites that on average, over the 74-year period ending in 2009, investors who did not manage investments in a tax-sensitive manner gave up between 100 and 200 basis points of their annual returns to taxes.(iv)  In a low-expected-return environment, this represents a significant cost to investors.

"Today's challenging market conditions and ever-changing tax landscape are unsettling for many investors," said John Sweeney, executive vice president, Fidelity Investments.  "Fidelity Personalized Portfolios addresses this concern by providing a professionally managed solution for investors who have accumulated wealth, are focused on proactive management of their portfolios in the current market environment, and want help managing and assessing their current holdings and potential tax consequences to try to achieve better after-tax returns."  

Personalized Approach With Tax-Sensitive and Risk Management Investment Strategies

Fidelity Personalized Portfolios was developed with Strategic Advisers, Inc., a registered investment adviser and wholly owned subsidiary of FMR LLC, the holding company for the businesses of Fidelity Investments.  Strategic Advisers has been providing asset allocation, retirement and tax-sensitive investment management services to Fidelity's individual and institutional clients for nearly two decades.

When developing Personalized Portfolios, Fidelity focused on creating portfolios that addressed the most important needs of high-net-worth investors – customized tax-sensitive portfolios that provide both a disciplined approach to risk management and are fully accessible and transparent.

To that end, a dedicated Fidelity investment professional works closely with each client to understand his or her investment time horizon, risk tolerances and certain aspects of the tax situation.  Strategic Advisers' investment team uses this information to determine an appropriate asset allocation for that investor.  Additionally, before a final allocation is set, investors can specify certain investment preferences, such as including or excluding certain mutual funds or exchange-traded funds (ETFs), retaining eligible securities currently held by the client, or requesting state-specific versus national municipal bond funds to meet certain needs.

"For affluent clients with higher asset levels, we may also recommend including the addition of the Strategic Advisers Tax-Managed U.S. Large Cap Separately Managed Account (SAI SMA) to his or her Fidelity Personalized Portfolio," said Jay Weed, senior vice president, investment manager, Strategic Advisers, Inc.  "Strategic Advisers built a Large Cap Core separate account that uses 100-200 individual equities that seek to track the performance of the U.S. market.  One tax-sensitive strategy used by the account is to identify existing losses that can be used to offset gains created elsewhere in the portfolio and provide greater flexibility to the investor by enabling a means of incorporating existing investment holdings in the portfolio."

To help maintain a client's target asset mix and identify potential tax opportunities, a systematic review of each account is conducted every business day, including investment quality, asset allocation drift and sensitivity to taxes.  If action areas are identified, an investment manager analyzes additional scenarios to determine if any trades can potentially improve after-tax performance.

Appropriate investments are selected for a client's Personalized Portfolio based on primary research conducted by Strategic Advisers.  Strategic Advisers follows more than 2,000 funds and hundreds of third-party investment managers.  It performs extensive quantitative and fundamental screening, including on-the-ground due diligence during hundreds of meetings worldwide with these investment managers.  With countless investment options to choose from across hundreds of firms, this research allows clients of Fidelity Personalized Portfolios to take advantage of some of the best thinking at Fidelity and across the industry.

To provide clear, ongoing transparency for clients regarding their Personalized Portfolios, Fidelity provides account access at any time on Fidelity.com including holdings, portfolio updates and performance metrics.  Additionally, clients receive one set of statements, tax documents and performance reports, providing simplicity and improved visibility.

Investors can find more information on Fidelity Personalized Portfolios at www.fidelity.com/personalized.

Account Minimums and Pricing

For those investors seeking the tax-sensitive investment and risk management benefits of Fidelity Personalized Portfolios, the account minimum is $200,000.  The account minimum increases for those investors who choose additional investment options such as the SAI separately managed account.  

The Fidelity Personalized Portfolios gross advisory fees(v) vary based on the specifics of the account and can range from 0.55 percent to 1.5 percent of the total balance on managed assets in the account.

Guidance Offered By Fidelity

In addition to a dedicated relationship with a Fidelity investment professional and access to a wide range of experts for those investing in the Personalized Portfolio service, the firm offers tax-related guidance, including the "Tax-Smart Investing" seminar held at local branches and regular Viewpoints articles on the subject at www.fidelity.com/viewpoints.  The most recent Viewpoints on the subject, examined specific strategies for investors to potentially boost their after-tax returns.

Investors considering a managed account, such as Fidelity Personalized Portfolios, also can attend the firm's seminar on managed accounts.  Specifically, the seminar addresses how investors can evaluate their current approaches to investing, and decide if professional portfolio management makes sense for them.  Investors can locate a seminar at an Investor Center near them at www.fidelity.com/seminars.

For additional investing guidance, investors can call 1-800-FIDELITY, stop by any of Fidelity's 151 investor centers across the United States or visit www.fidelity.com.  

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of nearly $3.4 trillion, including managed assets of over $1.5 trillion, as of November 30, 2010.  Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms.  For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity, Fidelity Investments and Fidelity Investments and the Pyramid Design logo are registered service marks of FMR LLC.

Fidelity® Personalized Portfolios is a service of Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company.  Fidelity® Personalized Portfolios may be offered through the following Fidelity Investments companies: Strategic Advisers, Inc., a registered investment adviser; Fidelity Personal Trust Company, FSB ("FPT"), a federal savings bank; or Fidelity Management Trust Company ("FMTC"). Nondeposit investment products and trust services offered through FPT and FMTC and their affiliates are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, are not obligations of any bank, and are subject to risk, including possible loss of principal. These services provide discretionary money management for a fee.

Brokerage services provided by Fidelity Brokerage Services LLC, 900 Salem Street, Smithfield, RI 02917, a Fidelity Investments company and a Member of NYSE and SIPC. Custody and other services provided by National Financial Services LLC, a Fidelity Investments company and a Member of NYSE and SIPC.

Fidelity® Personalized Portfolios applies tax-sensitive investment management techniques on a limited basis, at its discretion, primarily with respect to determining when assets in a client's account should be bought or sold. As a discretionary investment management service, any assets contributed to an investor's account which Fidelity® Personalized Portfolios does not elect to retain may be sold at any time after contribution. An investor may have a gain or loss when assets are sold.

Fidelity Brokerage Services LLC, Member NYSE, SIPC

900 Salem Street, Smithfield, RI 02917

570834.1.0

© 2011 FMR LLC.  All rights reserved.

(i) Fidelity® Personalized Portfolios applies tax-sensitive investment management techniques (including tax-loss harvesting) on a limited basis, at its discretion, primarily with respect to determining when assets in a client's account should be bought or sold. As a discretionary investment management service, any assets contributed to an investor's account which Fidelity® Personalized Portfolios does not elect to retain may be sold at any time after contribution. An investor may have a gain or loss when assets are sold.

(ii) Cerulli Edge Managed Accounts Edition, Third Quarter 2010

(iii) Fidelity Personalized Portfolios Affluent Investor Study was designed to explore the awareness and attitudes towards managed accounts.  The study was compiled from an online survey of 346 affluent investors ($200k+ taxable investable assets) by Synovate Inc. between October 14 and October 22, 2010.  Of the total 346 respondents, 163 had no managed account, 108 had a managed account but not a UMA and 75 had a UMA account.  Synovate Inc. is not affiliated with Fidelity Investments.  The results of Fidelity Personalized Portfolios Affluent Investor Study may not be representative of all investors meeting the same criteria as those surveyed for this study.

(iv) Taxes can significantly reduce returns data, Morningstar, Inc. 3/1/2010. Federal income tax is calculated using the historical marginal and capital gains tax rates for a single taxpayer earning $100,000 in 2005 dollars every year. This annual income is adjusted using the Consumer Price Index in order to obtain the corresponding income level for each year. Income is taxed at the appropriate federal income tax rate as it occurs. When realized, capital gains are calculated assuming the appropriate capital gains rates. The holding period for capital gains tax calculation is assumed to be five years for stocks, while government bonds are held until replaced in the index. No state income taxes are included. Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Generally, among asset classes stocks are more volatile than bonds or short-term instruments. Government bonds and corporate bonds have more moderate short-term price fluctuations than stocks, but provide lower potential long-term returns. U.S. Treasury bills maintain a stable value if held to maturity, but returns are generally only slightly above the inflation rate. Although bonds generally present less short-term risk and volatility than stocks, bonds do entail interest rate risk (as interest rates rise, bond prices usually fall, and vice versa), issuer credit risk, and the risk of default, or the risk that an issuer will be unable to make income or principal payments. The effect of interest rate changes is usually more pronounced for longer-term securities. Additionally, bonds and short-term investments entail greater inflation risk, or the risk that the return of an investment will not keep up with increases in the prices of goods and services, than stocks.

(v) Mutual fund fees and expenses, which are described in the funds' prospectuses, still apply.  Similarly, the management and operating expenses of any separately managed accounts in your portfolio also still apply.  Trust administration services are subject to a separate fee.

SOURCE Fidelity Investments