Fidelity Management and Research is one of the largest global fund houses, managing assets worth $1.5 trillion. The asset management company (AMC) has been charting a slow and steady growth path in India.
Ashu Suyash of Fidelity India spoke to Vandana on new business initiatives and plans to get into retirement assets. Excerpts:
Where does Fidelity stand among Indian asset management companies?
The year 2008 has been a landmark period for us. We launched a new business initiative, FundsNetwork, this year, three years after starting the asset management business in India. We are pleased with the AMC’s growth in this short span of time.
Fidelity India manages assets worth Rs 8,000 crore across ten funds. We have over 16 lakh customers in more than 300 towns, although we have offices in only 10 cities. We have launched Fidelity Adviser Institute (FAI), a centre of excellence for mutual fund advisers, in the first phase of FundsNetwork in an attempt to improve the market penetration.
What products are you planning to launch?
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With over 80 per cent of our assets invested in equity funds, we will focus on fixed income plans (FMPs) in the next few months. We have already launched our first FMP and the Fidelity Flexi Gilt Fund. Last year, there was an interest in short-dated plans.
As Fidelity India is a mainstream fund house, we will not launch products that cater only to a certain class of investors or merely for the sake of innovation. We are keenly looking at global products. Fidelity International has a huge basket of products, which we are looking to offer through the feeder-fund route.
How do you plan to expand the FundsNetwork Platform?
Fidelity FundsNetwork is available for mutual fund advisers and we hope to open it to retail investors by the early next year. More than 500 mutual fund advisers have already registered with FundsNetwork. India is the fifth country in the Fidelity Group to launch this platform after the US, the UK, Germany and Taiwan.
We are targeting a market share of more than 5 per cent in India over 5 to 6 years. Our experience in other markets shows that platforms tend to grow the industry and we expect the same in India too.
Through this platform, we hope to increase the number of insurance agents to sell mutual fund products as well.
What are your plans to manage retirement assets?
Fidelity is one of the leading global managers of retirement assets. We plan to get into the defined-contribution business by 2010. We are also looking at institutional mandates for managing money.
We did not participate in the bidding to manage the Employees’ Provident Fund Organisation corpus as the eligibility criteria made it mandatory for an AMC to be present in the country for a minimum of five years, while we have just completed three years.
How competitive is the mutual fund business?
Nearly 700 financial companies around the world are providing investment management services to investors in the US market, where one in two households invests in mutual funds. We clearly have a long way to go.
In India, we are at a stage, where mutual funds are so under-owned that an increase in the number of players can only help to grow the market and bring in more financial awareness and transparency.
Are you looking at launching a real estate mutual fund?
Fidelity has real estate mutual funds in other parts of the world. In India though, it is still early days. While the guidelines have been notified, we are still not comfortable with the valuation framework and other issues. So while we don’t have any immediate plans, we will watch the developments closely.
