Offshore funds will revitalise MFs: Fidelity MF

With the various initiatives that the Finance Minister has announced today, we believe the Finance Minister has presented a pro-growth budget.  The most interesting statistic, though, is the savings rate, which stands at 29.1% - showing an increase of 2.6% over last year. What makes it remarkable is that while domestic consumption has been widely believed to be the key driver of GDP growth, a significant and simultaneous increase in savings is a strong indicator of growing disposable incomes in the hands of people.

Specifically on the mutual fund industry, we believe that the announcement relating to offshore funds has been much-awaited and is the best development for the industry in a while.  Investors stand to gain from a geographical diversification of their portfolios and we look forward to bringing the benefit of our expertise, scale, track record and experience in global markets to the Indian investor.

By doing away with the anomaly of differential dividend distribution tax treatment for open-ended and closed ended funds, the Budget has sent a strong signal in favour of taking a long term view on equity investments and this will lead to wealth creation for investors.

The move to bring longer term fixed deposits and pension funds under the Section 80C umbrella is another step towards leveling the playing field between various savings and investment products. It will encourage investors to make investment decisions based on their needs and risk profile rather than for reasons related to tax-saving.

The author is Ashu Suyash, Country Head, Fidelity Mutual Fund

Also read -

• Important Budget announcements for Mutual Funds
• Budget '06 - Mutual Fund Wish list
• Extend zero dividend tax to equity close-ended funds: AMFI