Date:24/02/2005 URL: http://www.thehindubusinessline.com/2005/02/24/stories/2005022402541300.htm

Back Fidelity plans maiden equity fund in India

Our Bureau

Kolkata , Feb. 23

FIDELITY has sought the Securities and Exchange Board of India's permission to launch its maiden fund in India. The proposed Fidelity Equity Fund will have a diversified portfolio, aimed at generating long-term appreciation of capital. It will have the BSE-200 as its benchmark index.

The fund will be managed by Mr Arun Mehra, whose earlier assignments included those at Fidelity Investments.

It will follow a bottom-up approach to stock picking. In other words, there will be no more than a limited attempt to predict macro econo-political trends and taking investment decisions based on them.

The idea, the offer document has mentioned, is to "add the best opportunities that the market presents, without any sector / cap bias".

Fidelity Equity Fund, it is explained, will diversify across sectors, courtesy 60 to 80 stocks, with a few individual holdings exceeding four per cent of its net assets. It will ordinarily invest 95 per cent of its net assets in equities and equity-related instruments.

However, up to 20 per cent may be allocated to money market instruments if market conditions warrant such a defensive exposure.

CAMS and J P Morgan Chase Bank have been engaged as registrar and custodian respectively. The sponsor is Fidelity International Investment Advisors. The latter, an outfit incorporated in Bermuda, is a subsidiary of Fidelity International Ltd.

J P Morgan Chase, incidentally, will also serve as fund accountant.

How the expenses stack up

FIDELITY Equity Fund, which will require a minimum investment of Rs 5,000, will have an entry load of 2.25 per cent of the applicable NAV for allocations of less than Rs 5 crore. No entry load will be charged for higher amounts or for a SIP (Systematic Investment Plan) with a single instalment of Rs 1 lakh or less.

In case an investor wishes to redeem within six months from the date of allotment or purchase on FIFO (first-in first-out) basis, the exit load will be one per cent of the relevant NAV.

Redemption within two years from the date of allotment or purchase on FIFO basis will invite an exit load of two per cent if such purchase was made by way of SIP and the entry load applicable at the time of the SIP purchase was nil.

The draft offer document has also pointed out that redemption, irrespective of the amount, may attract an exit load. A switch-out or a withdrawal under SWP (Systematic Withdrawal Plan) may also attract such a load.