Fidelity India is set to enter the mutual fund distribution business in India, a senior official at the fund house said. It will be the first fund house in the country to launch a separate agency of its own to distribute MF schemes of all fund houses in the country. The existing distribution companies like ones from Birla and HDFC are a part of the financial group, rather than set up by the fund house. Many other MF houses are now expected to follow the Fidelity example. The rapid growth of assets in the MF industry and the fact that the money is coming from primarily a few cities is prompting many fund houses to expand their network. While many fund houses are setting up their own offices, others are using the services of independent distributors for the same. Fidelity India seems to have taken a cue from FundsNetwork, Fidelitys online investment supermarket, operational in the US and UK. It brings together over 1,100 funds from over 60 different fund management companies, offering varied choice to investors and their advisers.
The Boston Consulting Group forecasts that the industry could more than triple assets to $520 billion by 2015, a prospect that has attracted global players such as American International Group and JPMorgan and prompting many more like Japans Shinsei Bank and UBS to queue up for MF licence.
Fund distribution was always a lucrative business due to the commissions that a seller earns while selling a scheme to a customer.
Recently, financial services behemoth Merrill Lynch invested a sizeable stake in Bluechip Corporate Investment Centre, a Mumbai-headquartered financial products distribution house. Bajaj Capital, Way2 Wealth, RR Finance and banks like Citibank and HDFC Bank control a large part of the distribution business in India.
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