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Week In Review


Fidelity President Lawson To Step Down in March

Rodger A. Lawson, 63, president of Fidelity Investments since 2007, will step down in March. The fund giant will likely select one or possibly three successors from its executive committee, Lawson announced in a briefing Wednesday.

It is unclear whether Chairman Edward C. Johnson III, 79, will leave the firm as well, although two long-speculated choices to replace Lawson are Abigail P. Johnson, his daughter, and Jacques Perold, who became head of Fidelity's investment management last year.

Upon his immediate departure, Lawson said, the executive committee will assume his duties on a day-to-day basis. "It's from this group that the future leadership of the company will come," he said. Lawson added that his boss "will be around for a while" and that Johnson will turn "a young 80" in June.

Analysts have credited Lawson, who called the past 2-1/2 years "brutal," with vastly improving performance at Fidelity, which, with $1.2 trillion in assets under management, is the nation's largest mutual fund company. On an asset-weighted basis, Fidelity's mutual funds are now outperforming 74% of their peers, with equity funds beating 66% of the competition. A year ago, Fidelity's funds were ahead of 56% of their peers overall and only 36% of equity funds.

Lawson and Chief Financial Officer Robert Chersi noted that Fidelity's assets under administration rose 23% in the last year to $3.2 trillion, up from $2.6 trillion at the end of 2008. The company's 401(k) business is strong and the 9,000 positions that Fidelity has eliminated since 2007 have strengthened the bottom line, they said. Fidelity now employs nearly 37,000. This was Lawson's second tour of duty at Fidelity, having left in 1994.

Seven Money Funds Get Fitch's Highest Rating

Fitch Ratings has revised its ratings on seven money market funds to its highest score, following the launch of its new rating criteria and rating scale.

The funds, which were previously rated AAA/V1+, and one AAAV1, have had their ratings revised to AAAmmf, which is Fitch's highest rating. Fitch said this reflects the funds' more conservative investment profiles, portfolio liquidity and reduced risk during a period of heightened market uncertainty.

Fitch defines an AAAmmf-rated fund as having an "extremely strong capacity to achieve its investment objective of preserving principal and providing shareholder liquidity through limiting credit, market and liquidity risk."

The seven funds that Fitch Ratings upgraded are:

Alpine Municipal Money Market Fund, Henderson Liquid Assets Sterling Fund, Ignis Asset Management Euro Liquidity Fund, Ignis Asset Management Sterling Liquidity Fund, Prime Rate Capital Management-Euro Liquidity Fund, Prime Rate Capital Management-Sterling Liquidity Fund and Prime Rate Capital Management-U.S. Dollar Liquidity Fund.

Financial IT Spending To Increase 2.9% in 2010

Financial institutions will increase information technology spending 2.9% in 2010, after cutting budgets by 2.5% in 2009, according to research and consulting firm Celent.

The greatest growth in financial IT spending will be in Asia-Pacific, with expenditures rising 5.1% in 2010 and a cumulative average growth rate of 6.2% from 2010 to 2012. By 2012, Asian firms will spend nearly $102 billion on IT.

In North America, IT spending will reach $128.8 billion in 2012, for a CAGR of 4.4% between 2010 and 2012. IT spending in Europe will climb to $141 billion in 2012, a CAGR of 4.7% from 2010 to 2012.

Of all financial industry verticals, securities and investment firms are expected to increase their spending on IT at a faster rate, 3.4%, than any other vertical. In North America, the CAGR between 2010 and 2012 will be 6.2%. "Growth rates are starting to climb across all regions," said Jacob Jegher, senior analyst with Celent's banking group.

Advisers Expect 2010 To Be a Much Better Year

Despite the fact investors are more conservative after getting slammed by the recession, advisers and their clients are optimistic about the year ahead, with advisers looking to grow their business and improve their use of technology.

An SEI Advisor Network poll reveals that over half of investors have moved back into the markets, although risk and avoidance are now the overarching priorities. Forty-five percent of advisers said clients are "not as risk tolerant as originally thought," while 29% said clients learned they "can handle market volatility if they focus on long-term goals."

The majority of advisers communicated with clients more frequently last year, according to the poll, which surveyed 442 advisers this month and last month.

"Advisers are looking for new ways to make their business more secure and more successful," said Stephen Onofrio, head of sales and service, SEI Advisor Network. For this year, most advisers hope to become more client-focused, grow their book of business and improve technology.

BrightScope Gives 401(k) Investors Free Peek at Fees

BrightScope is offering a Personal 401(k) Fee Report so investors can see the actual fees on 30,000 plans, how they compare to other funds and how much the difference would cost them in fees up until their retirement.

(c) 2010 Money Management Executive and SourceMedia.