The biggest risk in the financial services business today is the Regulatory risk. The more the regulators think that they can prevent frauds and cheating the more they will move into the controls of a business.

Sebi has been making a lot of changes in the mutual fund business – there is a good chance that the size of the industry will shrink. Same thing about RBI and IRDA.

Just hold on! Is the industry shrinking in size? No. Not at all.

Some re-arranging will happen. If you have been wondering why there were 44 players in the mutual fund industry, but only 4 were profitable, well now there will be more.

Fidelity is planning to sell its stake (according to ET, but then ET has said this many times in the past, and frankly I have no clue whether they will or whether they are planning to).

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/fidelity-set-t

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  1. Subra Sir,
    If this news is true, then does it have any effect over the mutual fund investors of Fidelity Equity
    Actually I am one and have been investing in it since 10 months as SIP
    Kindly explain the implications taking this news to be true.

  2. It seems my query was not upto the standard of the forum. Not even one reply!!!
    Anyway I continue my SIP.

    dr kishan

  3. the worry is will you buy an automobile if you think the company is going into liquidation? You will not, right I presume. Similarly if a company is likely to be taken over all the employees are thinking ‘will I be kept or not’, ‘what is wrong with the industry’ etc.

    Into this muddled thinking comes your money. Will it get the undivided attention of the organisation? Not sure.

    I would rather stay away till the uncertainty clears. When in doubt, say NO.

  4. Your way of answering is one of the most special kind. you try to get the answer form within ourselves, rather than just answering with a “yes” or “no”

    Thats why we r your eternal fans
    thanks
    dr m kishan

  5. I too is planning to come out soon of this fund/ fund house which i did love till now. But the bigger question is is this industry that sensitive and non-profitable for such a good international player to opt out totally? With growth slowing down and lack of money flowing in isint it going to get tougher? What will happen if the few good reputed men in the industry too follow a similar path..?

  6. do not get confused…but Goldman Sachs is just entering at the same time when ET tells us that Fidelity is trying to leave. Surely SEBI and the other powers that be in the Ministry of finance think that salesmen are not necessary. How the whole exercise pans out, how NPS sells (if at all) are not questions for me to answer.

    In every industry there is always somebody coming in and somebody going out…we learn to live with that.

    I personally think Fidelity is a good fund house, however at their cost structure it must be difficult for them to do business in India, so they are quitting. Goldman thinks otherwise…

  7. there is a difference – goldman sachs bought into benchmark, which is an ETF specialist, where distribution model is unaffected by the SEBI guidelines that hit the MF distribution badly…
    fidelity of course had issues with its cost model, as well as distribution model (not favoring smaller ifas) – if they could not generate the target profits within the timeline, they should be allowed to move out, after all, that is what free market is all about.
    of course, it is a pain for investors to move out, think of the exit loads, new entry fees & tax impact – it would be good if switching under such circumstances is made zero-cost for investors.

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