Fido Incubates Long-Short Fund
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Tuesday, March 04, 2003

Fido Incubates Long-Short Fund

Fidelity Investments is mulling over whether it can market an internal private capital pool that it started at the height of the bull market. Word that Fidelity may take the hedge fund to external investors was reported this morning by Dow Jones Newswires. Currently the fund -- Geode Investors -- is holds money contributed by FMR Corp., Fidelity's parent.

The Long-Short fund is a potential follow-up to a market neutral hedge fund the firm started selling to qualified investors last year.

Fidelity opened the fund with $229 million of assets and contributed another $49 million to it last year, according to its 2002 annual report. It put Jacques Perold, who runs the firm's index funds, in charge of the effort. The intent at the time was for Fidelity to test the waters on a hedge fund, according to the report.

Stephen Jonas, Fidelity's chief administrative officer, told the paper that the fund uses a variety of statistical strategies to find stocks for the pool. The computers are used to find long-short trades to reduce the risk faced by the fund. The fund

Jonas told the news service that the fund is still in its "early days," implying that Fidelity may not be close to offering the fund to outside investors. "We're putting our own money at risk," he is quoted as saying. "They are strategies we feel aren't ready for prime time. It might take years to get it right."

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