The Hindu Business Line : `Many companies look good for longer term exposure'

WHEN it comes to investing for the longer-term, many Indian companies look promising right now, Ms Ashu Suyash, Business Head, Fidelity MF, tells Business Line.

She also dwells on Fidelity's plans for the new year - an equity linked savings scheme now, which may be followed up with cash and income funds.

Excerpts:

Do you subscribe to the theory that valuations are finally looking too stretched in India?

Let us look at it by comparing, say, now with five years earlier. The economy has obviously grown since then, while fundamentals look better than before. Many companies, given the performance they are delivering, look good from the point of view of taking longer term exposure in them.

At the same time, if a stock has run up, we will examine the possibility of taking home profits. We may not like particular stocks for certain reasons, but there is no question of completely avoiding any sector without definite grounds. This has been our policy with respect to Fidelity Equity Fund, which is so far our only product.

Will your ELSS follow a similar strategy?

The fund management strategy will be replicated in the sense we will adopt a `go-anywhere' approach here as well. There will be no bar in terms of market capitalisation or sectoral allocation. However, the fund manager will be able to take longer-term calls, given the basic nature of an ELSS.

Here I am referring to the compulsory lock-in period. The cash position in the tax-saving scheme will be somewhat reduced as well. To that extent, it will be different from our maiden fund.

As things stand, Fidelity Equity has a fairly diversified portfolio comprising 100 or so stocks. But as you know, whether we will have 90 stocks in our portfolio or 110 will be a function of the investment ideas at our disposal.

Will there be changes in your distribution policy?

Not really. As you might recall, we did not do business with each and every distributor during the launch of Fidelity Equity. Our network has grown since then.

A number of new distributors have made it to our list of partners. So the coverage will be wider this time. Internally too the team has increased in size; it now has about 50 people, spread over seven cities - compared to four earlier.

Is there actually scope for close-end funds in India? Or is it just a fad?

Yes, there is a place for such funds in the Indian market too. Now, if you are asking me if Fidelity itself is interested in tabling close-end schemes, then I must tell you that we do indeed have these products in certain other markets. But there are not too many of them globally. I think we find open-end funds, including open-end ELSS, a far more interesting category, something that will bring in a fresh set of investors.

Are there proposals for new funds from Fidelity?

In the New Year there will be income and cash funds from our side. We have worked out an open-end cash fund of funds (FoF), which will chiefly invest in liquid products of other MFs. The idea here is to have a basket of underlying schemes mainly on the basis of internal reviews of their performance and features of their portfolios.

At the end of the day we want to offer a range of equity, income and cash funds.