One of the buy side's largest and most visible players, mutual fund titan Fidelity Investments, plans to lay off up to 4,000 employees, according to a recent media report.
Citing unnamed sources, the mutual fund trade publication Ignites.com said Monday that Fidelity plans to cut 1,500 mostly back-office jobs by year-end and another 2,500 early in 2009.
A Fidelity spokeswoman told the Boston Globe that company leaders "are evaluating all of their operations, company by company and division by division, to make sure they're well-positioned for the future." The spokeswoman wouldn't comment on layoff rumors, but did say that some new hiring has been slowed.
The Globe, which relayed the Ignites.com story, also reported unofficial confirmation of the 4,000 job-cut number from an unnamed second-hand source "who has spoken with Fidelity executives involved in the planning." That source told the newspaper that the cuts won't necessarily be confined to back-office staff, but could also involve employees who work with customers and in its core mutual funds business.
Fidelity faces increased pressure to cut expenses because the 40 percent plunge in U.S. and world equity markets is shrinking assets under management - the base from which fees are calculated. Mutual fund customers also are withdrawing money from Fidelity, creating a double whammy. In August and September alone, withdrawals from Fidelity equity and bond funds totaled $8.3 billion, or 13 percent of industry-wide total withdrawals from long-term mutual funds, according to Morningstar data reported by the Globe.
Fidelity has reduced its workforce by about 1,000 in the past 12 months, to 45,500 as of mid-2008.