Fidelity Investments, one of the nation's best-known fund managers, is putting "Black Monday" and the $10 billion in managed funds it lost behind it as it holds a steady course toward better days.
The flow of investment dollars into money market funds after the October crash forced Fidelity to fire about 800 employees some 10 percent of its workforce earlier this year.But Fidelity officials at the privately owned fund manager say they believe the worst of the troubles is over. Although total funds under management fell rapidly to $75 billion after Oct. 19, they have now recovered to around $82 billion.
Considering the size of the October drop, the amount of redemptions in growth funds such as the $650 million Trend Fund was surprisingly small, said its manager Alan Leifer. "As much as 90 to 95 percent of its assets are very stable.
"Post-crash we specifically took the opportunity to raise our exposure to small, fast-growing companies. There's been a sharp payback in the last three or four months," Liefer said.
"Ninety-five percent of our customers are still with us," noted Mike Hines, vice-president for retail marketing.
Most of the post-crash layoffs came in marketing and retailing. Officials say they do not anticipate that the cuts will alter Fidelity's customer base.
Much of the recovery from the October collapse occurred in Fidelity's 28 money market funds, which have grown rapidly to $33.5 billion. Money market funds generate fewer fees and sales charges than mutual funds.
But a smaller flow of cash into money market funds in recent weeks suggests that confidence in the stock market is building.
"For the last 30 days inflows have been flat, after being sharply up in the previous three months," said Fred Henning, managing director of Fidelity's money market group. He said Fidelity's market share for the group is up to 10.6 percent for 1987 from 8.2 percent the year before.
Henning said that while "the economy is probably stronger than most people think," some caution remains. "We've never been in these waters before," he said. "We have to be a bit careful."
Part of this caution is reflected in Fidelity's search for new products and activities.