Asset Firms Cast a Wary Eye On New Competitor, Fidelity

The largest asset management company in the world is about to open a branch in Korea. The establishment of an investment trust operation by Fidelity Investments is expected to bring dramatic changes to an industry now suffering from a prolonged slump.

Brett Goodin, the general manager of Fidelity Investments Asia, said Wednesday that the new company will begin operation in six to 12 months.

Fidelity Investments occupied the No.1 position last year in Japan, where it began operations in 1969.

Mr. Goodin said that investment trusts represent just 5 percent of fund management in Korea, with the bulk of the business taken by commercial banks and insurance companies. "Korea is an attractive market when we consider the number of conservative investors who invest with banks and insurance companies," he said.

Mr. Goodin said Fidelity will be targeting those conservative investors. "We are not really interested in investors who are concerned about quick returns," he said. Mr. Goodin said Korea presents Fidelity with a perfect opportunity. The high savings rate, the level of education and government reform that promotes competition make conditions good, he said.

Domestic investment trust companies are alarmed by the prospect. "Fidelity will take up a considerable portion of the market when it establishes a company here," the president of Korea Investment Trust Management Co., Cho Young-je, said. "Domestic companies must improve in the technical aspects of fund management to bring them up to international levels."

Mr. Goodin said it is desirable in terms of risk management to put at least part of the funds in overseas investments. Fidelity already markets mutual funds in Korea, investing in overseas markets through Citibank, Korea Investment Trust Management & Securities Co. and Mirae Asset Securities Co.

by Chung Jae-hong