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What should investors do with Investments in Fidelity Mutual Fund?
March 28, 2012

Impact on a regular investor with L&T Finance's buy out of Fidelity Mutual Fund. Or to be more precise, the sole question lingering through the minds of investors, "What should you do with the investments made in Fidelity's Mutual Funds?"

Author : Debanjan Guha Thakurta

 How is a regular investor affected with this buy out. What should you do with the investments made in Fidelity’s Mutual Funds


The big news doing the rounds in the mutual fund industry is L&T buying out the India business of Fidelity Mutual Fund for an undisclosed amount. However, the amount paid by L&T is assumed to be lower than the bids offered by HDFC Asset Management Company and Pramerica.

But, how is a regular investor affected with this buy out? Or to be more precise, the sole question lingering through the minds of investors, “What should you do with the investments made in Fidelity’s Mutual Funds?”


If you have already invested in Fidelity MF

Do not panic! The world is not coming to an end; there is no reason to worry. L&T Finance is a part of world renowned Indian conglomerate giant L&T.
“We’ll be able to retain investors… We’re an equally good brand. We have good fund management capabilities to satisfy investors. The integration will also happen at the distributor level,” said Y.M Deosthalee, Managing Director and Chairman of L&T Finance. (Source: Economic Times, 28 March 2012)

There is mention in the media that majority of the employees and staffs will be absorbed by L&T Finance and the Equity Fund Management team will be with L&T Finance till the integration process is complete. “Fidelity employees need not worry about this deal. L&T Finance is an equally strong brand. And historically, Indian funds have done much better than foreign fund houses," Deosthalee pointed out. (Source: Economic Times, 28 March 2012)

The fact that L&T AMC has majority of its assets under management in the fixed income category and Fidelity, on the other hand, has majority of its assets in the equity category, the deal is seen as complimenting each other’s skill sets. Investors, therefore, should benefit from the synergies that get drawn in from both the brands.

Mr. N. Sivaraman, President & Whole-time Director, L&T Finance Holdings Limited added, ''We have significant bandwidth in the equity investment management team comprising 9 members (3 portfolio managers and a team of 6 analysts/associates) which will ensure that the integration is smooth and the investors and distributors continue to enjoy the same high quality experience that they have come to expect from both, L&T Mutual Fund and Fidelity Mutual Fund." (Source: Press Release - L&T Finance Limited, 27 March 2012)


One should not get swayed by any frenzy. This comment by Mr. Deosthalee should help us sum up what is in it for us in this transformation "With this acquisition we are one step closer to achieving our vision of being among the top players in the Indian mutual fund industry. We remain committed to that goal and look forward to building one of India's most admired asset management businesses. This acquisition provides L&T Mutual Fund the necessary scale, products and access to retail customers to grow profitably." (Source: Press Release - L&T Finance Limited, 27 March 2012).

Better products, higher service quality and in all, a vision to be a top player in the fund management space – all for the good of the investor!

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