FMR Corp., the financial services conglomerate better known as Fidelity Investments, is creating a second board of trustees to help oversee its swell of mutual funds.
Fidelity serves more than 22 million individual and institutional clients and has more than $1.5 trillion of assets under management through hundreds of mutual funds.
But at the urging of independent trustees, the company is forming another board to better deal with the workload. Right now the 11-member board of trustees oversees some 369 funds.
One board will oversee stock and high-yield funds. The other will manage bond and money markets.
Trustees look after the interests of the shareholders by choosing what firm to hire to actually run the fund.
"With multiple boards trustees can pay more attention to each fund," said Greg Carlson, an analyst with fund-rating agency Morningstar.
The strategy is catching on as the mutual fund business grows, according to Carlson. He said other companies are also expanding their boards.
Having two boards, he said, will allow Fidelity trustees to play a more active role in decisions like when to change fund managers.
Boston-based Fidelity is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm.
It's not clear whether Fidelity CEO Edward "Ned" Johnson, 77, will remain in the chairman's post of either, or both, boards.
Morningstar prefers an independent trustee as chairman, Carlson noted.
"An independent chair — rather than one who is strongly affiliated with the management company — can better represent fund shareholders' interests, which is what fund boards are designed to do anyway," he said.
Fidelity said process of creating two boards will take several months and then shareholders must give their approval.