The Hindu Business Line : Reveal everything when possible

IS Fidelity Mutual Fund going against the spirit of the law by not revealing the full portfolio of the recently-launched Fidelity Equity Fund? It has unveiled only the top 10 holdings (as on June 30), which, at best, is merely a part-disclosure that investors must tolerate whether they like it or not.

Fidelity, which claims to be in favour of spreading its assets across a broad range of industries "with a portfolio of more stocks than you would typically find in a mutual fund - around 75", should do better than this if it has to live up to the expectation that has been generated so far.

Before you dub this as a one-sided view, let us acknowledge right away that Fidelity Equity has done a decent job since its launch earlier this year. Its performance - nearly 100 per cent returns, annualised - will satisfy the most virulent of critics.

That, however, is not quite the point here. The matter is simple - the fund has not provided what it could have furnished easily. This is just not acceptable; not when it is Fidelity, the gifted newcomer that has set trends in a manner that a few other players have in an industry made up of about 30 asset management companies.

A unitholder surely has the right to full information, complete in all respects. He needs to know how his money has been allocated, to which stocks and to what extent. The fund manager is actually not doing him a great favour by holding back facts that may well serve as critical inputs, ones that may even form the basis of his next decision.

For the record, the fund has allocated to well over 20 sectors, with banking, oil, software and consumer non-durables accounting for large chunks of the end-June portfolio. Reliance, SBI and ONGC, Bharti and Zee are the top five holdings. Fair enough. Smaller, in some cases tiny, allocations have been made to fertilizers, printing & publishing, transportation and several other industries. In which stocks? To what extent? There are no answers to these questions.

You may argue that Fidelity is not bound to provide full disclosure in the first place, and that it has not gone against the letter of the law. Surely, there are elements in the market that are in a position to misuse such information to their unfair advantage. That, it can be said with a certain degree of certainty, is quite a possibility in the Indian context.

The other assertion is that the abridged version of the portfolio will not really be a sore issue with the common investor. He does not stand to lose if the fund's performance is satisfactory. He is far more concerned with making money - not with a mere list of stocks - and as long as that happens, there is nothing to be worried about.

Agreed. However, these arguments still do nothing to alter our original contention. Fidelity has to decide whether it wants to be a true leader in the asset management space. As of end-July, it already has the largest-sized equity scheme ahead of Franklin India Flexicap.

For all you know, supporters of Fidelity (that is, the more radical ones) will probably offer a strong prescription: An aggrieved investor - never mind if his objection is justified - should simply walk out of it all and take his money elsewhere.

After all, you cannot be everybody's friend.

Feedback may be sent to nilanjan@thehindu.co.in

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