The Hindu Business Line : Fidelity Mutual seeks nod for global use of feeder funds

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Mumbai Feb. 2 Fidelity Mutual Fund has applied to the market regulator for permission to invest overseas the funds collected in India either through the feeder fund route or directly through the equity route.

In the former, funds collected here will be managed by Fidelity's funds operating globally.

The asset management company feels that the present norms for overseas investment by mutual funds of up to $3 billion should evolve further.

"Currently, clarifications on feeder funds are being sought on issues relating to investments only in listed equity. We feel that fund managers should be allowed to take cash positions. Also, investment in only listed equity implies that investments cannot be made in initial public offerings, etc. Thus we are awaiting the regulator's guidelines on these issues," said Ms Ashu Suyash, Managing Director and Country Head of Fidelity Fund Management Pvt Ltd.

"Diversification of investors' assets is very important and overseas investment will help in achieving the same," said Ms Suyash.

Internationally, Fidelity has a wide range of funds; the investor would be able to invest in such funds, which have proven track records, through the feeder fund route, added Ms Suyash.

However, at present, the fund house may look at evolving a fund that would invest overseas under the $3 billion investment limit, she said.

Strong sales

Mr Richard Wastcoat, Managing Director, Fidelity Investments International, pointed to the strong sales growth of mutual funds in India and said that though assets under management in India ($75 billion) are one-tenth that of the UK ($800 billion), India has high net inflows and sales compared to the UK.

However, he said most of the money flow into funds in India came through new fund offers. "There is still a long way to go before Indian markets mature and have funds which have long-proven track records," he added.

Fidelity International entered India 18 months ago and currently manages around Rs 5,800 crore of assets, with the majority of funds in the equity segment.

"There is huge potential for investment in India as we are enthusiastic about the Indian economy. There is a vast scope for product innovation unlike other countries where mutual fund investors are retired people, etc. Thus, international markets are looking at India," said Mr Wastcoat.

Fidelity International manages about $4 billion of assets under the India dedicated funds in Japan and Luxembourg, said Mr Wastcoat.

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