Fidelity Investments, every mention
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every year anyone David Rosenthal 44Ben Gilbert 25Brad Gerstner 4Dara Khosrowshahi 1
Verbatim, from the transcripts: the passages where Fidelity Investments comes up
Vanguard: The communist capitalist who saved investors a trillion dollars (Audio) · Acquired
- ▶ 1:35 Ben Gilbert Vanguard is the largest shareholder of most U.S. corporations, and together with the other big index funds like BlackRock, State Street, and Fidelity, they own 24% of the entire U.S. stock market.
- ▶ 31:13 David Rosenthal Fidelity.
- ▶ 33:21 Ben Gilbert All right, so David, the entrance of fidelity into our story.
- ▶ 34:35 David Rosenthal And Fidelity was the one that pioneered all of this.
- ▶ 34:38 David Rosenthal So Fidelity goes all the way back to the early Boston mutual fund scene, kind of like same era as the Massachusetts fund.
- ▶ 34:46 David Rosenthal Johnson, who had previously been Fidelity's legal counsel, takes over the firm right before the end of World War II.
- ▶ 35:00 David Rosenthal At the time, Fidelity is managing just three million dollars, and the previous owners, who I think are, you know, retiring, they literally give Fidelity, the firm, to Edward Johnson for free.
- ▶ 35:37 David Rosenthal But yeah, this is why, like, spoiler alert, obviously Fidelity is one of the largest
- ▶ 35:57 David Rosenthal So when Ed Johnson takes over Fidelity, he starts trying a whole bunch of stuff to grow it.
- ▶ 36:30 David Rosenthal So for a long time, Wellington management company just managed the Wellington fund, and Fidelity had just had the Fidelity fund.
- ▶ 37:29 David Rosenthal So pretty quickly, Psy and Fidelity start to become, like,
- ▶ 38:01 David Rosenthal Basically zero, like startup initiative within Fidelity itself, already a small firm, to a three hundred and forty million dollar fund here by 1965 when Bogle is taking over Wellington from Mr.
- ▶ 40:11 David Rosenthal They want what Fidelity and Jerry Tsai are doing.
- ▶ 40:45 David Rosenthal Jerry Sy, the, you know, celebrity fund manager here at Fidelity, he starts to think, all right, you know, Mr.
- ▶ 40:57 David Rosenthal I think I should take over the firm.
- ▶ 41:19 David Rosenthal So, Cy says, okay, fine.
- ▶ 42:27 David Rosenthal Through Fidelity and Jamie Dimon and all of this stuff.
- ▶ 42:51 David Rosenthal So he goes out and he starts looking for go-go style fund managers to merge with and absorb into Wellington and transform Wellington into what Fidelity has done.
- ▶ 43:12 David Rosenthal Yeah, I mean, hey, if Jerry Sy just left because he didn't get a big equity piece in Fidelity and take over the firm, like anybody else who thinks they're as good as him, you know, they're going to want an equity piece in the management…
- ▶ 43:37 David Rosenthal And the lead partner there, Nick Thorndyke, had just come out of Fidelity, where he had worked with Jerry Sy and Ed Johnson.
- ▶ 1:06:34 Ben Gilbert That you can run this business at cost, and you don't need to pay huge sums of money to the people managing this, then our customers will demand the same from us, which is sort of right, because you can buy an S&P 500 index fund from…
- ▶ 1:25:50 David Rosenthal Vanguard, BlackRock, Fidelity, State Street, all paying them a lot of money.
- ▶ 1:26:25 Ben Gilbert Fidelity tried that.
- ▶ 1:26:27 Ben Gilbert There is a 500 stock fidelity fund that is not quite the S&P 500, or at least doesn't license the name, but people just don't flock to it.
- ▶ 1:31:34 David Rosenthal Oh, Ned Johnson at Fidelity.
- ▶ 1:31:36 David Rosenthal Remember Fidelity we talked about?
- ▶ 1:31:51 David Rosenthal Deeply ironic, because a giant amount of Fidelity's asset base today is composed of index funds, many of which are Vanguard index funds held within Fidelity.
- ▶ 1:32:00 Ben Gilbert The funny thing about Fidelity is that I think they're primarily a brokerage.
- ▶ 1:32:04 Ben Gilbert They do have their own in-house funds.
- ▶ 1:32:06 Ben Gilbert I think a lot of people own Vanguard funds using Fidelity's website.
- ▶ 1:56:21 Ben Gilbert Which is funny because they're not structurally incentivized to do it over at Fidelity and BlackRock and State Street and, you know, all the others that are starting to roll out these very low fee index funds.
- ▶ 2:17:52 Ben Gilbert Probably the bigger thing is the rise of the four or one K where suddenly people are responsible for their own retirement and they have a vehicle here, which I'm sure we'll talk about infidelity.
- ▶ 2:35:44 David Rosenthal But thinking about today, now that indexing is so much bigger, if there ever were to be a problem or a failure of one of the big indexing players, Vanguard or BlackRock or Fidelity or State Street, like,
- ▶ 2:36:44 David Rosenthal On the back of this, in September, 2010, Vanguard passes Fidelity to become the world's largest mutual fund manager, and
- ▶ 2:39:55 David Rosenthal Of the entire mutual fund industry, the previous high watermark being Fidelity when it was the leader had 15%.
- ▶ 2:40:28 David Rosenthal For reference, the Johnson family, as we said from Fidelity, is worth about 40 or fifty billion dollars through the, you know, estimated 40% that they still own of Vanguard or Larry Fink over at BlackRock.
- ▶ 2:40:58 David Rosenthal I mean, Vanguard's bigger than Fidelity at this point, so maybe hundred billion dollar delta that Jack leaves on the table just goes right back to the American investing public.
- ▶ 2:41:32 David Rosenthal I used a minute ago Fidelity and BlackRock and their founders and controlling families for reference.
- ▶ 2:41:48 David Rosenthal Fidelity and BlackRock have just.
- ▶ 2:42:03 David Rosenthal And Fidelity has had an incredible comeback too.
- ▶ 2:42:17 Ben Gilbert So I know more about Fidelity than I do about BlackRock.
- ▶ 2:42:21 Ben Gilbert In my mind, Fidelity is sort of more of a brokerage.
- ▶ 2:42:26 Ben Gilbert They're like a brokerage that has funds, and Vanguard is like a set of funds that happens to have a brokerage.
- ▶ 2:42:40 Ben Gilbert I have a Fidelity brokerage where I own mostly Vanguard funds.
- ▶ 2:42:52 David Rosenthal So, as we said throughout the story, Fidelity has always been very happy to experiment and invest in lots and lots of different things, and they have hit on two, like, real home run platforms in recent years, both of which are weak spots…
- ▶ 2:43:14 Ben Gilbert Is corporate four Oh one K plans as you foreshadowed earlier, Ben, which is why I am a fidelity customer.
- ▶ 2:43:28 Ben Gilbert So then I opened my first fidelity brokerage account and that is how they've retained me as a customer for.
- ▶ 2:43:57 David Rosenthal So even though Fidelity and Wellington slash Vanguard all started in the same business as fund managers, Fidelity realized, Hey,
- ▶ 2:44:19 David Rosenthal Fidelity is very happy to have their four Oh one K and brokerage account holders.
- ▶ 2:44:56 Ben Gilbert They are invested in Vanguard ETFs via their direct relationship with a different brokerage, primarily Fidelity.
- ▶ 2:45:04 David Rosenthal And that different brokerage, at least in Fidelity's case, and in many of their cases, is also a competitor in the funds business.
- ▶ 2:45:17 Ben Gilbert So Fidelity doesn't have a huge incentive to say you should come buy my two basis point fund over here instead of your three basis point fund over at Vanguard.
- ▶ 2:45:32 David Rosenthal It doesn't matter, but you could play this out years into the future where if this dynamic continues and fidelity is able to make a lot of profits from all of their account holders in their other businesses, you know, for one K management…
- ▶ 2:46:04 Ben Gilbert This is like Vanguard is Microsoft and Fidelity is Google, and they could launch Gmail and say that thing, that's your primary business.
- ▶ 2:46:59 David Rosenthal Fidelity is just a better product and product experience than Vanguard.
- ▶ 2:47:33 David Rosenthal Whereas Fidelity, as they started to realize that this strategy is going to work for them, they said, oh, this is going to be a weak spot for Vanguard.
- ▶ 2:48:06 David Rosenthal So that's the Fidelity story.
- ▶ 2:50:54 David Rosenthal Similar again, though, to the Fidelity strategy, BlackRock's profits elsewhere in the business allow them to subsidize the ETF business and just win massive amounts of clients.
- ▶ 2:51:20 David Rosenthal Actually hold it back today, relative to Fidelity and BlackRock.
- ▶ 2:51:26 David Rosenthal When we started the process for this episode, Ben and I originally thought that the question of the episode was going to be, how do Fidelity and BlackRock continue to exist at all, despite Vanguard's, you know, obviously superior model?
- ▶ 2:51:54 David Rosenthal And we kind of had to change it here as we went through the research of, oh, actually, Fidelity and BlackRock are doing so well, is the question actually flipped?
- ▶ 2:53:15 Ben Gilbert I think like if you're Vanguard, you're delighted to get the business to have people buying Vanguard funds on Fidelity, but there is a vulnerability of you actually don't have a relationship with those customers, but, and they have a…
- ▶ 2:53:56 Ben Gilbert Try and expand into retirement, where obviously Fidelity has really knocked it out of the park.
- ▶ 3:22:07 Ben Gilbert So why would they compete if, let's say that 20% goes to 50% or 80%,
- ▶ 3:29:44 Ben Gilbert I'd have to think back to when I first started buying index funds, but I probably picked Vanguard over a Fidelity fund because they both looked de minimisly low fees, and I was like, oh, Vanguard's probably the right thing I'm looking for.
- ▶ 3:34:52 David Rosenthal Would Fidelity, would BlackRock, would State Street be charging the low, low fees that they are today on their index products?
Novo Nordisk (Ozempic) · Acquired
- ▶ 3:43:30 Ben Gilbert A shareholder letter from Tom Williams, who's a friend of the show, and a portfolio manager at Fidelity.
Visa (Audio) · Acquired
- ▶ 2:28:12 Ben Gilbert I mean, now Visa is owned mostly by big institutional shareholders, the vanguards and fidelities of the world, and the banks are much smaller shareholders.
Uber CEO Dara Khosrowshahi · Acquired
- ▶ 1:02:56 Dara Khosrowshahi But we now have a set of shareholders like the Fidelities of the world, Capital, Morgan Stanley, et cetera, that have the capacity to own a lot of shares, way more than they do today, and there's a consistency about it.
The Playbook: Lessons from 200+ Company Stories · Acquired
- ▶ 34:46 David Rosenthal Amazon, Microsoft, Apple, Tesla, McKinsey, Uber, Twitter, Ford, Stripe, Starbucks, Fidelity, Convoy, Modern Treasury.
Altimeter (with Brad Gerstner) · Acquired
- ▶ 21:46 Brad Gerstner I had a Fidelity account, actually, and I would do my research on the Bloomberg, and then we'd place trades.
- ▶ 1:22:18 Brad Gerstner If you really just close your eyes, it's just a third door into the public market, and we go help you build a book, we help you price the security, we help you sell it to Capital Group and Fidelity and T.
- ▶ 1:42:29 Brad Gerstner And I think if they do, think of how elegant that Robinhood app is, or your Schwab or your Fidelity app, you open it up, and they see all of these names, their tiny little ownership of all of these names, and they see that grow over time,…
- ▶ 1:44:11 Brad Gerstner You know, I talked to David Solomon at Goldman, the folks at Schwab, Fidelity, everybody sees this as a challenge.