Fidelity Investments
Fidelity Investments, the trading name of FMR LLC and formerly Fidelity Management and Research, is an American financial services company headquartered in Boston, Massachusetts. It is among the largest asset managers in the world, with approximately US$7.8 trillion under management and US$19.9 trillion under administration as of mid-2026, and it is the largest provider of workplace retirement plans in the United States.
| FMR LLC, trading as Fidelity Investments | |
|---|---|
| Type | Private |
| Industry | Financial services, asset management, brokerage |
| Founded | 1 May 1930 as the Fidelity Fund; Fidelity Management and Research from 1946 |
| Founder | Edward C. Johnson II |
| Headquarters | Boston, Massachusetts, United States |
| Area served | Worldwide |
| Key people | Abigail Johnson (chairman and chief executive) |
| Products | Mutual funds, exchange-traded funds, brokerage, retirement plan administration, wealth management, custody, clearing, life insurance, digital assets |
| Revenue | Approximately US$32 billion (2024) |
| Employees | Approximately 77,000 |
| Website | fidelity.com |
Fidelity is privately held and has never listed its shares, an arrangement that distinguishes it from every other financial institution of comparable size. The founding Johnson family and its affiliates hold roughly 40 per cent, and current and former executives hold the remainder, a structure that has allowed the firm to pursue strategies whose costs fall in the present and whose benefits arrive years later, including the introduction of zero-fee index funds in 2018.
Its activities span discount brokerage, mutual fund and exchange-traded fund management, workplace retirement administration, wealth management, securities execution and clearing, custody, life insurance, charitable giving through Fidelity Charitable, and digital assets, including custody of cryptocurrency and its own dollar-denominated stablecoin. It processes approximately 5.7 million trades on an average day and administers employee benefit programmes for more than 28,000 businesses.
History
Origins and the Johnson family, 1930 to 1977
The Fidelity Fund was incorporated in Massachusetts on 1 May 1930, with Edward C. Johnson II as president. Johnson, a Boston lawyer who had become absorbed by markets, took control of the fund in 1943 when it held about US$3 million, and reorganised the management arrangements in 1946 as Fidelity Management and Research.
His approach broke with the prevailing practice of Boston money management, which emphasised the preservation of established wealth through diversified holdings of established securities. Johnson believed that a fund should be managed by an individual exercising judgement rather than by a committee applying rules, and that its manager should be identified publicly and held accountable for results. He hired Gerald Tsai, a young Chinese-American analyst, to run the Fidelity Capital Fund from 1957, and Tsai's concentrated, high-turnover investment in growth stocks produced returns and publicity of a kind mutual funds had not previously generated. The model of the star fund manager, now universal, began there.
Fidelity International was formed in 1969 to serve markets outside the United States and was separated in 1980 as an independent company owned by its employees, an arrangement that persists, so that the Fidelity name is used by two distinct organisations in different parts of the world.
Edward Johnson III, Magellan and the retail revolution, 1977 to 2014
Edward C. Johnson III, known as Ned, succeeded his father in 1977 and led the firm for nearly four decades. Two changes made during his tenure transformed it.
The first was the Employee Retirement Income Security Act and the subsequent creation of the 401(k) plan, which moved American retirement saving from employer-funded pensions to individual accounts invested in securities. Fidelity began offering 401(k) products in 1982 and built the administrative infrastructure to run such plans for employers, a business of very large scale that made it the intermediary through which a substantial proportion of American households own shares. The relationship it acquired through the workplace became the basis for selling those households brokerage accounts, individual retirement accounts and advice.
The second was direct distribution. Rather than sell funds through brokers who took a commission, Fidelity sold them directly to investors by telephone and later by computer, eliminating the sales load and establishing a relationship with the customer that the firm controlled. It introduced computerised trading in 1984, discount brokerage, and in 1995 became the first mutual fund company to operate a website.
The Magellan Fund became the most famous investment vehicle in the world. Peter Lynch managed it from 1977 to 1990, returning an average of about 29 per cent a year and growing it from US$18 million to US$14 billion, and his books One Up on Wall Street and Beating the Street popularised the idea that an ordinary investor could outperform by observing the products and companies around them. Magellan became the largest mutual fund in the world and remained so until index funds displaced it.
Other developments included the launch of the first commercial donor-advised fund in 1991, which became Fidelity Charitable and is now among the largest grant-making organisations in the United States; the appointment of Robert Pozen as chief executive of the fund arm; the launch of the firm's first exchange-traded fund, tracking the Nasdaq Composite, in September 2003; and the reorganisation of the legal structure in 2007 into a limited liability company under FMR LLC.
Abigail Johnson, 2014 to present
Abigail Johnson, Ned Johnson's daughter and the founder's granddaughter, became president and chief executive in 2014 and chairman in 2016. She had joined as an analyst in 1988 and worked through the fund management and operating businesses.
Her strategy reduced the firm's dependence on actively managed open-ended mutual funds, the product on which it had been built and which was losing assets steadily to low-cost index funds, and redirected it toward advice, brokerage, workplace administration, custody and technology services, businesses that earn fees from relationships rather than from security selection.
The most conspicuous expression of that shift came in August 2018, when Fidelity introduced index mutual funds charging no management fee at all and with no minimum investment. The funds lose money in themselves and exist to attract customers whose other business is profitable, a strategy that would be difficult for a listed company to explain and which the private structure permitted. Competitors were obliged to respond, and the episode accelerated a decline in investment management fees that has continued.
Fidelity has been among the most substantial established financial institutions to engage with cryptocurrency. It began mining bitcoin in 2014 as a research exercise, established Fidelity Digital Assets in 2018 to provide custody and execution to institutions at a point when almost no regulated institution would touch the sector, launched a spot bitcoin exchange-traded fund in January 2024 when the Securities and Exchange Commission permitted them, and subsequently issued a dollar-denominated stablecoin, the Fidelity Digital Dollar, on the Ethereum network. Its early and cautious entry has been contrasted with the reluctance of banks and with the failures of specialist crypto firms.
Other developments include the separation of the venture capital arm Eight Roads Ventures in September 2019, the closure of the earlier Fidelity Ventures in 2010, and the acquisition in January 2023 of Shoobx, a provider of automated equity management software, folded into the stock plan services business.
Business
Asset management
Fidelity manages mutual funds, exchange-traded funds, separate accounts and institutional mandates across equities, fixed income, multi-asset and money market strategies. Its money market funds are among the largest in the world, a business whose significance became apparent during the 2008 crisis and again in 2020, when the stability of such funds was central to the functioning of short-term credit markets.
Its actively managed equity funds, historically the firm's identity, compete against index products that charge a fraction as much and that a very large body of evidence indicates outperform the majority of active managers after fees. Fidelity's response has been to compete on cost within active management, to build a substantial index business of its own, and to emphasise that scale in research remains an advantage in less efficient parts of the market. Geode Capital Management, which manages a large proportion of Fidelity's index assets, was separated as an independent firm in 2003.
Brokerage and wealth
Fidelity's retail brokerage is among the largest in the United States by accounts and assets, competing with Charles Schwab, which absorbed TD Ameritrade, with Vanguard, with the wirehouse brokerages and with newer entrants including Robinhood. It eliminated commissions on online equity trading in 2019 within days of Schwab doing so, ending a fee that had existed for as long as retail brokerage had.
Wealth management provides advice through Fidelity's own planners, through a robo-adviser, and through Fidelity Institutional, which supplies custody, clearing and technology to several thousand independent registered investment advisers, a business in which it competes directly with Schwab and which has grown as advisers have left the brokerage firms to operate independently.
Workplace and benefits
Fidelity administers retirement plans, health savings accounts, stock plan services and benefits programmes for employers, holding accounts for tens of millions of individuals. The business is operationally demanding and produces modest margins, and its value lies in the relationships it creates: a person who first encounters the firm through a workplace plan is likely to bring other assets to it later.
Investments for the firm's own account
The company makes investments on its own account for the benefit of the founding family and its executives, historically through Devonshire Investors and related vehicles. Holdings have included Seaport Center and substantial office space in Boston, the telecommunications companies COLT Telecom Group and MetroRed, Community Newspaper Company, the building materials businesses Lanoga, Hope Lumber and ProBuild, and the chauffeur service Boston Coach.
A Reuters investigation in 2016 reported that Fidelity executives had bought shares in private companies at prices far below those subsequently paid by funds the firm managed, giving as an example purchases of Alibaba Group shares at seven cents each. The report raised the concern that later purchases by managed funds supported the valuation of holdings owned personally by executives and by the founding family, a conflict of interest the firm disputed.
Regulatory and legal matters
Fidelity has been the subject of enforcement actions and litigation of the kinds common to firms of its size. It was fined for failures in the retention of business records including instant messages and email, a subject on which regulators have penalised almost every large financial institution. It has faced claims under the Employee Retirement Income Security Act concerning the fees charged within its own employees' retirement plan and concerning payments received from fund companies on its platform, several of which have settled.
It has been criticised, as its competitors have, over payment for order flow, the practice by which retail orders are routed to market makers that pay for them, and over the interest rates paid on uninvested cash swept into affiliated accounts, a practice that became the subject of litigation across the brokerage industry from 2024 when interest rates rose and the difference between what customers received and what firms earned became conspicuous.
Regulatory attention to its proxy voting, to its stewardship of the very large shareholdings its funds control, and to the influence a small number of asset managers exercise over corporate governance generally, applies to Fidelity alongside BlackRock, Vanguard and State Street.
Corporate affairs
The firm employs approximately 77,000 people, with major operations in Boston, Merrimack in New Hampshire, Covington in Kentucky, Westlake in Texas, Durham in North Carolina, Smithfield in Rhode Island, Ireland and India. It has grown headcount substantially at a time when much of the financial industry has reduced it, principally in technology and in customer service.
Abigail Johnson is among the wealthiest women in the world and one of very few to control a financial institution of this scale. Her position rests on family ownership rather than on appointment, and the firm's private structure has been defended on the ground that it allows long-term investment and criticised on the ground that it leaves a very large and systemically significant institution outside the disclosure requirements that apply to listed companies.
Fidelity's principal competitors are BlackRock and Vanguard in asset management, Charles Schwab in brokerage and adviser custody, and Empower and Voya in workplace retirement administration. Its distinguishing characteristic among them is breadth: it competes with each in one business while few compete with it in all.