Fidelity May Cut 9% of Workforce

www.EmploymentCrossing.com Boston's Fidelity Investments is considering reducing head count as it suffers negative cash flow in its stock mutual funds, according to the Wall Street Journal. Layoffs could include as many as 4,000 employees, or about 9% of Fidelity's work force, and would affect a number of Fidelity units, including its core investment-management arm. Layoffs are rampant in the mutual fund industry, as investors have been pulling money out of stock funds in record amounts. Mutual-fund companies earn much of their money from fees assessed as a percentage of assets, meaning that market declines and redemptions of fund shares have a direct impact on the bottom line. Janus Capital Group of Denver is cutting 9% of its work force. New York's AllianceBernstein says layoffs are "unavoidable," and Kansas City's American Century may reduce staff. Investors have been taking money out of more volatile stock funds, which typically have higher fees and are the most profitable products sold by fund companies. With the Standard & Poor's 500-stock index down 36% so far in 2008, net redemptions from stock mutual funds have been on track to hit an all-time high this month, analysts say this week's 11% increase in the index could check some of the redemptions and bring a little relief to fund compa