Personal Finance

Big Mutual Funds Battling Over 'Boomer' Retirees


Fidelity Investments launched a series of mutual funds targeted at U.S. retirees, signaling the growing fight for baby boomer retirement assets in the $11.5 trillion mutual fund industry.

Oliver Quillia for

Fidelity, the world's biggest mutual fund firm, said it launched 11 fund-of-funds that aim to produce regular income for retirees by allocating assets to stocks, bonds and money-
market instruments depending on the investment time horizon.

The firm also launched a retirement income annuity product.

"Many retirees struggle to understand how much of their savings they can comfortably spend each year in retirement," Boyce Greer, Fidelity's president of fixed income and asset
allocation, said on a conference call. The firm manages $1.5 trillion overall.

Fidelity's launch comes just a week after Vanguard Group, the second-biggest U.S. mutual fund group, said it had made regulatory filings to launch three mutual funds to provide monthly payments to retirees.

"Both companies sense that there is an unmet need for simple-to-understand, yet effective programs to help retirees obtain income from their investments over the years," said Jeff
Tjornehoj, senior research analyst at Lipper Inc.

Fidelity Funds for Boomers

Fidelity's Greer said as 78 million American baby boomers -- the generation born between 1946 and 1964 -- retire, there could be "trillions of dollars" that will need to be invested.

"It is the biggest area for investments and financial management for the foreseeable future," he said, referring to the retirement market.

The new Fidelity Income Replacement Funds are different from its Freedom Funds, which are "lifecycle" products that generally target the working population and invest in a mix of
underlying funds based on some parameters like the age or risk tolerance of an investor.

Fidelity, which pioneered lifecycle funds, and had assets of $75 billion and more than 3 million investors in the Freedom Funds in early September, said the new funds could be just as

"I don't think we anticipated that our Freedom Funds were going to be as popular as they were when we introduced them in 1996. This could be a repeat of that," Greer said.