UPDATE 1-Fidelity's new asset allocation head tasked with stemming outflows

(Recasts to include Freedom Fund withdrawals)

BOSTON, Feb 7 (Reuters) - Fidelity Investments is betting on an executive from a rival firm to stem billions of dollars in outflows from its flagship retirement franchise.

The mutual fund giant said on Wednesday it had hired former AllianceBernstein executive Vadim Zlotnikov to run its $440 billion global asset allocation division. Zlotnikov will report directly to Charlie Morrison, Fidelity's head of asset management.

Zlotnikov's new duties include oversight of Fidelity's Freedom Funds, which are a staple offering in retirement plans offered by U.S. corporations, hospitals, municipalities and universities.

Zlotnikov, who had been chief market strategist at AllianceBernstein, will have to contend with Vanguard Group, which has dominated the target-date fund industry since the 2008 financial crisis. In 2014, Vanguard usurped Fidelity as the No. 1 provider of funds that reduce risk as investors near retirement.

Assets in Fidelity's Freedom Funds, which include the $31 billion 2020 Fund, increased 23 percent over the past three years to $224 billion, according to data from Morningstar Inc. But those gains at the No. 2 target-date fund provider have come mostly from the buoyant stock market.

During the past three years, investors have made net withdrawals of nearly $8 billion from Freedom Funds, according to Morningstar.

By contrast, Vanguard's target-date fund assets have surged about 66 percent over the past three years to $373 billion, according to Morningstar. Vanguard has benefited from capital gains while collecting a dominant share of the net deposits flowing into the target-date fund industry. (Reporting By Tim McLaughlin; Editing by Paul Simao)