Fund house Fidelity's latest scheme, the Fidelity India Growth Fund, aims to invest largely in growth-oriented firms in the domestic and international markets to deliver long-term capital appreciation.
But for that, Fidelity's latest fund is like any other growth fund
MUMBAI: Fund house Fidelity's latest scheme, the Fidelity India Growth Fund, aims to invest largely in growth-oriented firms in the domestic and international markets to deliver long-term capital appreciation. The new fund offer of the open-ended, diversified equity fund that opened on Monday, would be open till September 26.
Benchmarked to the BSE 200, the Fidelity India Growth Fund will have a normal allocation to equity and equity related securities of 95%, with a range of 80-100%. It also has the leeway to invest up to 10% in overseas securities.
As per existing RBI/Sebi rules, individual fund houses cannot invest more than $200 million in overseas securities. And exhausting this limit has been on the agenda of Ashu Suyash, managing director and country head, Fidelity Fund Management for over four months now.
In April, while launching the International Opportunities Fund, she was confident that the fund will exhaust the limit, which roughly translates into Rs 800 crore. She had then said that they would approach the regulator for expanding the limit to enable more investments abroad.
The international opportunities fund had a corpus of Rs 1,645 crore, as of July 31. It can invest 35% of its corpus in international equities. That means, it can invest up to Rs 575 crore, which is over Rs 200 crore short of the RBI ceiling.
The Indian MF investors' legendary apathy for existing schemes makes it next to impossible for this gap to close in the near future. So, what does Fidelity Fund Management do? It inserts a 10% clause in the NFO of the India Growth Fund - it can invest up to 10% in international securities.
Now, if they collect a little over Rs 2,000 crore, which every fund house worth its entry load these days has been able to do, they will exhaust the the $200 million limit comfortably. It might even give them some leg room for launching another global product, provided the regulator is willing.
When DNA Money asked Suyash at the press conference about the $200-million limit, she said, "This fund is bound by RBI/ Sebi regulations for overseas investments." Under the regulations, while the collective limit has been expanded to $4 billion, the cap on individual fund houses has not been expanded, she pointed out, hoping the limit will be expanded, going forward.
But for this improvisation, Fidelity India Growth fund would be like any other growth fund in the industry, unless manager Sandeep Kothari comes up with something special. Kothari has had a good track record with his other funds - Fidelity Equity and Fidelity Tax advantage - having comfortably beaten the benchmark BSE 200 in one-year and two-year timeframes.
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