How Fidelity Manages Asset Allocation Funds

Understanding how to balance risk and return is one of the key principles behind successful investing. At Fidelity, we believe that a diversified investment strategy is critical to creating this balance. That means building a portfolio that offers exposure to a mix of different types of assets, and adjusting that mix in response to—or in anticipation of—changes in the investing environment.

We offer a number of different kinds of asset allocation funds, each of which is managed to serve a different investor need. Some are designed to take the guesswork out of investing for retirement, while others are designed to provide a stream of income in retirement. We also offer funds that allow you to invest in a fixed asset allocation that matches your tolerance for volatility or risk, as well as funds that are managed dynamically to adjust their asset class exposure as market conditions change. We even offer funds that give managers the flexibility to pursue opportunities anywhere in the world they may arise.

While each Fidelity asset allocation fund is a little different, every one is backed by our steadfast commitment to research and our careful adherence to strategic goals and principles.

We offer an extensive range of asset allocation portfolios managed to suit the risk/return preferences of many types of investors, including funds that seek to balance investments in global stocks and bonds, target allocation funds that range from conservative to most aggressive, and target date funds, whose asset allocation dynamically shifts in an attempt to reduce exposure to volatility over time. A portfolio that offers exposure to a mix of different types of assets can help reduce the impact of market volatility, and help balance the need for income and capital appreciation.

Fidelity's Asset Allocation Group is composed of a dedicated team of investment professionals averaging over 20 years of investment experience, and including experts in global economic analysis as well as asset allocation. In addition, we're backed by the world-class research and portfolio management skills of over 800 investment professionals located around the globe. Fidelity conducts its own comprehensive research on government and corporate issuers worldwide, and specialists in asset allocation and security selection can draw on tens of thousands of proprietary research notes generated annually by our bond, money market, equity, and asset allocation divisions to evaluate the implications for investors in both debt and equity

We seek to maximize risk-adjusted returns for our investors by leveraging the expertise of an integrated organization dedicated to multi-asset investing, including business cycle analysts, inflation analysts, and additional quantitative analysts. While many fund companies apply either fundamental or quantitative analysis to the management of these types of funds, Fidelity seeks to combine fundamental, quantitative, and macroeconomic analysis in the pursuit of benchmark outperformance and risk management. The ability to do this consistently across all funds, sub-portfolios, and tools is grounded in our practice of applying both strategic and tactical approaches while combining bottom-up fundamental research with an innate understanding of macroeconomic events and their impact on our portfolios. Our areas of expertise—allocation modeling, credit research, quantitative research, and trading—work together to help us identify investment ideas that can potentially address a wide range of investor objectives.

Our extensive research platform includes access to Fidelity's vast network of fixed income and equity analysts, as well as specialists in the high yield, emerging markets, and equity sectors. This network, and the proprietary empirical data it generates, is critical to our ability to manage investors' asset allocation in today’s complex global environment.