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Fidelity exec eyes earnings
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March 4, 1999: 6:10 p.m. ET
CEO Robert Pozen says volatility inevitable; Fed will remain 'hands-off'
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NEW YORK (CNNfn) - Don't count on the Fed to trigger a "liquidity-driven rally" this year like the one that pulled the U.S. market out of a slump in late 1998, a top Fidelity executive warned Thursday.
Robert Pozen, chief executive at the Boston-based mutual fund company, said the Federal Reserve is likely to take a hands-off approach this year -- and any market rally will have to come from earnings.
"The market rebounded very strongly at the end of the year, and it was a liquidity-driven rally," Pozen said in a speech at a luncheon sponsored by the New York Financial Writers' Association. "We can't count on the Fed to inject this level of liquidity that we saw last year."
Pozen, who oversees Fidelity's fund managers, spoke about a number of trends he expects to dominate financial markets in 1999.
Investors are going to have to get used to volatility in the stock market, he said.
And it is still not clear whether small- and mid-cap stocks will finally catch up to larger companies that roared ahead in 1998, he said.
Abroad, Pozen said he sees signs that economies in Asia are stabilizing.
"The good news is (Asia) doesn't seem to be plummeting," he said. But he said he still has questions about Japan and China.
Pozen also introduced a new educational video series to help investors understand how the mutual-fund industry works.
"We see this appetite among shareholders for information," he said. "These people want all the information we can give them."
Fidelity looks to the Web
As more fund companies set up shop on the Internet, Fidelity is doing about 10 percent of all its mutual-fund transactions via the Web, Pozen said.
The company looks at the Web as an important way to get information out to shareholders.
"The mutual-fund industry has been a little slower than the brokerage industry in doing transactions on the Web," he said. He blamed concerns about security, but said fund companies are catching up to the online brokerages.
Y2K preparations continue
As mutual fund companies develop programs to handle computer-related problems caused by the Millennium, Pozen said Fidelity recently completed a plan and is testing the system.
"Fidelity is well along in Y2K planning," he said. "We're in good shape."
International institutions are behind U.S. institutions in Y2K planning, and the U.S. government also has some catching up to do, he said.
Fidelity is the largest fund company in the United States, with assets of $782 billion.
-- by staff writer Martine Costello
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