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Fidelity copes with fund flow
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March 11, 1998: 2:34 p.m. ET
Mutual fund giant's Pozen tells CNNfn how managers are navigating volatility
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NEW YORK (CNNfn) - The record-setting stock market has lured herds of investors back into mutual funds, creating hefty challenges for the managers of those funds.
One man who knows quite a bit about investors' appetite for stocks is Robert Pozen, chief executive officer and president of Fidelity Management & Research, the largest mutual fund company in the United States.
Pozen explained how his company is coping with those inflows on CNNfn's "Business Day" with anchors Deborah Marchini and Stuart Varney.
Following are excerpts from the interview:
VARNEY: Essentially, sir, you manage the people who manage a half-trillion dollars, if I'm not mistaken. Is it true that a lot of those people are so young they can't even remember a bear market?
POZEN: Well, the average age of our portfolio manager is about 35. Some of our managers are over 50 and some of them are closer to 30. So, there are quite a few of them that can remember a bear market.
VARNEY: …that can remember and quite a few who presumably cannot.
POZEN: Well, some of the younger analysts have not had the experience of a bear market, no doubt about that.
VARNEY: Is the money still pouring into mutual funds the way it has for the past three or four years?
POZEN: Well, the money is coming in pretty rapidly. At the end of last year in November and December, we had concerns among investors and you had a sort of flight to the large stocks and to Treasuries. But now this year, the market has come pretty much booming back and the money flowing with it.
DEBORAH MARCHINI: The money is going into stock [funds] rather than international funds or bond funds?
POZEN: Well, I think at the beginning of the year, there was more money going into bond funds as people were quite tentative. Now, as people are having a little more confidence, there's more money going back into stock funds and into international funds. You know, Southeast Asia obviously has had its problems, but Europe and other foreign markets have been very strong.
MARCHINI: Are you seeing a flow of money back into Asia funds?
POZEN: Well, you know, there are always bottoms fishers. I think our little Korea fund was up over 40 percent in January. So, if you can forget about the past and realize that the past in investing is ancient history and just look forward, the real issue is are you going to do better going forward, not whether things have happened in the past. So, there are people now coming back in saying maybe Asia has bottomed out.
MARCHINI: What about your portfolio managers and how they are coping with the current level of market volatility? Is there some concern out there that the market volatility could make investors nervous and do you -- are you operating now with, say, bigger credit lines than you used to?
POZEN: Well, I think most people have come to grips with the market volatility. We have more day-to-day price volatility than we've ever seen. But you know we're very well prepared to do that. We have our lines of credit. We have cash management vehicles and for us it's really not much of an issue. I think the cause of all this volatility is a lot of uncertainty. We have people, you know as I said, going all one way in November, December thinking that, well, Asia's going to be all bad and then this year, thinking after awhile that Asia's now nothing.
What we're trying to do at Fidelity is get beyond the generalities and look on a company-by-company basis to see who are going to be the winners from Asia and who are going to be the losers. And in order to do that, you really have to see, you know, where are companies getting their supplies, where are they doing their manufacturing. You have to really get into this sort of detail.
MARCHINI: That's why we American investors like our funds managers. (laughter) Robert Pozen, of Fidelity, thanks a lot.
POZEN: Thank you. 
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