Tuesday, April 10, 2012

Fidelity investors: Exit and reinvest elsewhere

Investors in Fidelity schemes should look for an exit in the 30-day no-load window that will be available to them. Returns of L&T Mutual Fund have been nothing to be confident about

L&T Mutual Fund (MF) recently came into the Indian fund industry, having been setup through the acquisition of DBS Cholamandalam Mutual Fund in 2010. Chola was a running a poor management and investors entering the L&T Mutual Fund fold have not done any better. With the acquisition of Fidelity Mutual Fund, one of the better performing fund houses, L&T MF has become the 13th largest fund house up from 24, out of a total of 43 fund houses currently present. But the sad news for investors in the schemes of Fidelity MF is that the sale to L&T MF does not include the fund management team. Fidelity’s fund management team would be there until L&T MF builds its team to manage the newly acquired assets.

The fund management of Fidelity MF has been much better than that of L&T MF. As seen in the performance compared to the benchmark, the returns of L&T funds have fallen short of the benchmark on a number of occasions, whereas the funds of Fidelity have outperformed their respective benchmarks on all the occasions for the one-year, two-year, three-year and five-year periods ending 31 March 2012. The investors of Fidelity wouldn’t want the L&T fund management team handling their investments seeing this performance of the fund house. Investors who are worried about their investments and those who are doubtful of the fund management team of L&T should look for an exit in the 30-day window given to them where they will be charged no load for exit.

Venugopal Manghat recently joined as vice president & co head - equity investments at L&T Mutual Fund. He was earlier the head of equities at Tata Asset Management. He was the fund manager of Tata Pure Equity and Tata Equity Opportunities—two equity funds of Tata MF which have done well in the past. He took over managing L&T Growth fund from Pankaj Gupta last month. Would he be able to turn around the performance of L&T equity schemes? One would just have to wait and watch. At the same time Shobheta Manglik has joined as assistant vice president & fund manager-fixed income. She has been jointly managing the few of the debt-oriented funds and has an experience of over 10 years. Pankaj Gupta with an experience of over 10 years has been managing three of the equity funds since September 2010 and Anant Deep Katare, who has over nine years of related experience, has been managing L&T Hedged Equity fund and L&T Midcap Fund since October 2007. L&T Mutual Fund would have probably done well had Sanjay Sinha, who came in from SBI Mutual Fund, stuck around. But he joined in September 2008 and quit in August 2011.

Compare this to the current fund management of Fidelity. All the equity diversified funds of Fidelity are co-managed. Anirudh Gopalakrishnan, who has a work experience of over 10 years, is the common fund manager for all the four schemes and has been managing these funds for foreign securities investments since October 2010. He, along with Sandeep Kothari, who has an experience of 17 years, manages Fidelity Equity Fund and Fidelity India Growth Fund and along with Nitin Bajaj, who has an experience of 12 years, manages Fidelity India Special Situations Fund and Fidelity India Value fund. Fidelity does have a more experienced team but unfortunately they would not be managing the schemes once L&T Mutual Fund acquires them.

Source: http://www.moneylife.in/article/fidelity-investors-exit-and-reinvest-elsewhere/24872.html

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