Where is Fidelity [see profile] headed? Two major ratings agencies disagree over how bright the Boston-based mutual fund titan's future will be. On April 1 Moody's reduced its outlook on FMR's (Fido's parent) debt from stable to negative while maintaining the A2 rating [see The MFWire, 4/4/2011], yet today the Boston Globe's Todd Wallack reports that S&P reaffirmed its stable outlook on (and A+ rating of) FMR.

S&P's analysts, like Moody's, still had some concerns, reportedly worrying over the "revolving door of senior managers and a never ending realignment of the organizational performance" as well "mediocre investment performance" and the fate of a home-building supply subsidiary, ProBuild Holdings.

"We believe FMR's core earnings power should be better given the size, breadth, and distribution capabilities of its asset management franchise and other financial services business," S&P's report reads. "In our opinion, FMR's top priority is to improve short- and long-term investment performance on a consistent basis across all asset classes, but especially in its equity mutual funds."

S&P still praised Fido for its giant mutual fund, retail brokerage and retirement plan businesses. 

Edited by: Neil Anderson, Managing Editor


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