Fidelity Unveils Plans for 5 ‘Funds of Funds’ Portfolios

Fidelity Investments said Tuesday that it plans to introduce a series of “funds of funds” called LifePlan funds--five portfolios that will invest in the firm’s other mutual funds.

“We’re still in the research and development stage rather than the roll-out stage,” said Charles Dornbush, executive vice president of Fidelity Institutional Retirement Services Co.

Fidelity’s LifePlan series will likely be available by the end of the year, Dornbush said. The funds will be marketed to the more than 6,000 companies to which Fidelity provides retirement plans such as 401(k) plans and 403(b) plans.

Each of the five LifePlan funds will be designed so that they match a specific age group’s retirement age horizon, Dornbush said. Younger investors, for example, will more likely want a fund that takes more risks and therefore invests a greater percentage of its assets in stocks rather than bonds. The LifePlan funds will probably have a choice of about 12 Fidelity funds in which they can invest depending on their investment parameters, Dornbush said.

Fidelity will join Vanguard Group and T. Rowe Price Associates Inc. among the nation’s big fund groups to offer the funds of funds.

Vanguard launched its first fund of funds, the Star Portfolio, about 11 years ago. Today, the nation’s second-biggest fund company offers five fund-of-funds portfolios with a combined $6.1 billion in assets. T. Rowe Price introduced its two Spectrum funds five years ago. Each has about $1 billion in assets.