Fidelity® Finds Investor Response to Continuing Market Volatility Varies Significantly Among Different Investor Types

BOSTON--(BUSINESS WIRE)--Fidelity Investments^®, a leading online brokerage company and the No. 1 provider of workplace retirement savings plans and Individual Retirement Accounts (IRAs)¹, released research data today that finds varying investor reaction and behavior to the ongoing market volatility.

“Although active investors have been shaken by the volatility, they are generally more comfortable and confident in continuing to take advantage of opportunities they see having emerged from this situation”

Fidelity recently polled active investors -- those highly engaged individuals who trade 36 or more times a year, and general investors -- those with retirement and brokerage accounts who may be less active in their trading, to determine how the market environment is impacting both groups’ investing behaviors.

In a poll conducted last month with active investorsⁱ, more than a third (36 percent) indicated that they believe the current state of the market is just a temporary setback. These more experienced traders told Fidelity they see market opportunities in today’s environment and are increasing their trading with nearly one-third (32 percent) saying they are taking advantage of bargains and attractive valuations right now. Mirroring this trend, Fidelity saw its retail brokerage clients increase their trading in the second quarter of 2010, with daily average revenue trades (DARTs) reaching a record high of 257,355.

This more opportunistic view of the market is also reflected in the fact that 43 percent of active investors indicated they plan to decrease their portfolio’s cash allocation in the next six months with nearly half intending to decrease by more than 20 percent. Additionally, 67 percent forecasted they expect to beat the market in the next 12 months.

“Although active investors have been shaken by the volatility, they are generally more comfortable and confident in continuing to take advantage of opportunities they see having emerged from this situation,” said James C. Burton, president of Fidelity’s retail brokerage business. “This is in contrast to general investors who are more cautious and have been actively working with Fidelity’s investment professionals who can help them to determine how best to manage their portfolios through this challenging period.”

General Investors Seek More Guidance Due to Market Volatility

General investors, although more cautious than active investors, have proactively reached out to Fidelity for help in navigating the markets’ daily swings. In fact, in the first six months of this year, Fidelity fielded over 8 million investor phone calls, an average of 60,000 calls per day, and provided portfolio guidance through more than 750,000 interactions via phone, investor centers, and through online asset allocation and planning tools (interactions are up 8 percent year-over-year).

As well, the firm’s business data shows more clients are choosing to hand over management of their investments to Fidelity’s managed account services team², with its new account openings growing 23 percent, and assets under management growing 40 percent year-over-year through June 2010.

In an investor pollⁱⁱ earlier this month, general investors showed their more risk-averse nature when roughly eight-in-ten (83 percent) said they would like to see a minimum of six months of market stability in order to feel comfortable making further investments, and of that group, nearly half would prefer a year or more. If in fact, they decide to invest further, the poll showed that general investors’ expected investing returns varied greatly, and on average were surprisingly aggressive, with the median³ annual investment return expected to be 8 percent.

Looming Tax Increases a Concern for Investors

In addition to the ongoing volatility, broader financial issues such as potential tax increases are also impacting general investor confidence and behavior. Investors list “tax increases” as one of their top three financial challenges in the next 12 months, alongside “deciding where to invest” and “saving for retirement”ⁱⁱⁱ. In fact, nine-in-ten general investors (89 percent) said they expect their taxes to go up during the next 12 months, and Fidelity has found through its many guidance interactions that investors are seeking help on how best to prepare for this changing tax landscape.

“Today we’re working with many investors to help them understand the impact of rising taxes on their portfolio and how to leverage tax-smart investing approaches, such as tax-loss harvesting, to help minimize the impact and protect their savings⁴,” said John Sweeney, executive vice president, Fidelity Investments.

Fidelity Offers Guidance, Resources for Investors Looking for Help

Recognizing early on that investors would need substantial help to navigate through the ongoing market volatility and economic challenges, the firm took multiple steps over the past year-and-a-half to ensure clients can access the specific services and support most appropriate for their needs. This includes:

Hiring hundreds of financial professionals, and retraining more than 1,000 existing representatives to provide dedicated one-on-one relationships for clients with complex portfolio needs, who want a more personalized service.
Hosting more than 200,000 investors at over 6,000 live investor education forums at employer sites and retail branches in the first half of the year. The firm plans to host a total of 13,000 forums by year end.
Producing more than 130 investing perspectives, including market and economic commentary written by Fidelity's seasoned money management experts, and articles on investing insights and personal finance topics that were accessed more than 1.5 million times by interested investors (www.fidelity.com/viewpoints). This effort will continue throughout the year.

For investing guidance, and to access to Fidelity’s broad spectrum of products, services and educational resources, investors can call 1-800-FIDELITY, stop by any of Fidelity’s 136 investor centers across the United States or visit www.fidelity.com.

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of over $3.1 trillion, including managed assets of $1.4 trillion, as of June 30, 2010. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.

Fidelity, Fidelity Investments, Fidelity Portfolio Advisory Service, Fidelity Private Portfolio Service, National Financial, and the Pyramid Design logo are registered service marks of FMR LLC.

Guidance provided by Fidelity is educational in nature, is not individualized and is not intended to serve as the primary or sole basis for your investment or tax-planning decisions.

The tax information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Fidelity does not provide legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation and to more fully understand the regulations surrounding conversions.

The results of this study may not be representative of all individuals meeting the same criteria as those surveyed for this study.

The third party trademarks appearing herein are the property of their respective owners.

Fidelity Brokerage Services LLC, Member NYSE, SIPC
900 Salem Street, Smithfield, RI 02917

557353.2.0

¹ Cerulli Edge Retirement Edition, First Quarter 2010 (Data as of Q3 2009)

² Both Fidelity Portfolio Advisory Service^® and Fidelity Private Portfolio Service^® (PPS) are offered by Strategic Advisers, Inc., a registered investment adviser and a Fidelity Investments company, or by certain affiliates of Strategic Advisers, Inc. These services provide discretionary money management for a fee. PPS applies tax-sensitive investment management techniques on a limited basis, at its discretion, primarily with respect to determining when assets in a client’s account should be bought and sold. An investor may incur a gain or loss when assets are sold.

³ The median is the mid-point of all answers provided.

⁴ Ibid, footnote 2.

ⁱ About the Active Investor Poll
The Fidelity June 2010 Active Investor Poll was conducted June 24, 2010 at Fidelity’s Traders’ Summit in Austin, Texas, on hand-held Audience Response System devices provided by Turning Technologies. On average, 282 Traders’ Summit attendees responded to each question. The results of the polls may not be representative of all investors meeting the same criteria as those surveyed.

ⁱⁱ About the General Investor Poll
Fidelity conducted a national telephone survey of 518 investors who were 18 years or older and had retirement and/or non-retirement savings outside of a cash account. This survey was conducted between July 9 and 12, 2010 by Infogroup^®, an independent company not affiliated with Fidelity Investments.

ⁱⁱⁱ Source of investors’ top three financial challenges:
A survey conducted online by Harris Interactive on behalf of Fidelity Investments and National Financial^® between March 10 and 17, 2010 among 350 investors who are members of the Harris Interactive consumer panel and represent financial decision makers at U.S. households with investable assets of at least $100,000, not including any workplace retirement assets or real estate. The results of this survey may not be representative of all investors and advisors meeting the same criteria as those surveyed for this poll.