The booming economy and rising fortunes of many Indian companies are encouraging mutual funds to introduce funds that invest in growth stocks.

Fidelity Fund Management, Indian outfit of global mutual fund company, is the latest entrant which recently floated its Fidelity India Growth Fund. This is an open ended, diversified equity fund which will invest largely in growth oriented companies in Indian and international markets. The objective is to deliver long term capital appreciation.

Explaining how Fidelity’s fund will be different from growth funds, Fund Manager Sandeep Kothari told Deccan Herald that the difference is in stock picking. “Our philosophy of ‘bottom-up’ stock picking focuses on core strengths of a company based on first-hand, 360-degree research. It is this approach that helped us in providing very good returns to investors in our Fidelity Equity and Tax Advantage funds.”

The Fidelity Equity Fund in the one year period ending July 31, 2007, has given returns of 61.52 per cent outperforming its benchmark BSE 200 which returned 48.50 per cent. Since inception the return from this fund was 52 per cent, he observed. Similarly, Fidelity Tax Advantage Fund has given 56 per cent return in one year period ending July 31, 2007.

Fidelity believes there is tremendous growth opportunity for large number of companies in India reflecting the growth curve of the economy. “What is driving growth is favourable demographic composition, India’s knowledge capital, cost advantage, productivity improvements and improving corporate governance,” he said. Fidelity’s Growth Fund will look for stocks which benefit from this growth environment, stocks where earnings growth will drive long term performance. Of course, valuations will remain a key consideration in stock selection, he added.   The minimum amount for lump sum investments is Rs 5,000, the entry load is 2.25 per cent and exit load is 1 per cent for redemptions within first six months.