Investing

Retirement savers moving some money out of stocks, says Fidelity's personal investing president

Key Points
  • "We've seen in the last few months that there's more money on the sidelines" among retirement savers, says Fidelity's Kathleen Murphy.
  • The opposite is true of more active investors. She says they "lean into" market volatility and trade more.
  • The shift comes during a "roller coaster" year for the market on global economic uncertainty and the U.S.-China trade war, adds Murphy.
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Why Fidelity has jumped on the commission-free trading trend

Fidelity clients saving for retirement are starting to move some money out of stocks in the recently volatile market, the brokerage's personal investing president told CNBC on Friday.

"The average investor that doesn't trade a lot that's really looking to save for their retirement — we have millions of customers like that — we've seen in the last few months that there's more money on the sidelines," Fidelity's  Kathleen Murphy said. "More money is going into money market funds."

Assets in U.S. money market funds, seen as being nearly as safe as bank accounts, hit their highest level since 2009, reaching nearly $3.36 trillion last month, according to a private report.

The shift comes during a "roller coaster" year for the market that's seen dramatic drops and rises as global economic uncertainty spreads and the U.S.-China trade war drags on, Murphy added.

U.S. stock futures were pointing to a sharply higher Friday open on Wall Street, with President Donald Trump casting a positive view on the China trade talks. Earlier this week, stocks were on an unsure path following both positive and negative reports ahead of the talks.

"We've seen in the last few months that there's more money on the sidelines," Murphy said. "I think people are trying, they are staying the course, which is great. They're not panicking. But I think they are in a little bit of a wait and see mode."

However, the opposite holds true for active traders, added Murphy, saying they "lean into" the volatility and trade more. "When there's volatility in the market, they get busy trading," she said of Fidelity's "more active investors."

Fidelity Investments on Thursday announced that it's offering zero-commission online trades as the brokerage industry moves toward low-fee systems.

The company eliminated commissions on all of its trades involving stocks, options and exchange-traded funds. The news follows Charles SchwabE-TradeTD Ameritrade and Interactive Brokers, which all announced similar moves.

Murphy said Fidelity won't sell clients' stock trade information to hedge funds to make up for offering zero fees.

VIDEO6:0106:01
Why Fidelity has jumped on the commission-free trading trend
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Key Points
  • Fidelity says it's trying to differentiate itself in the zero online commissions wars by not selling the right to execute trades to third-party firms.
  • "Many competitors do to the tune of hundreds of millions of dollars," says Fidelity's Kathleen Murphy.
  • Payment-for-order-flow refers to how market makers, like Citadel Securities or Virtu Financial, pay for the first crack at executing a stock order.