With markets witnessing volatility, SBI Mutual Fund Deputy MD and Joint CEO DP Singh has advised new SIP investors to consider multicap funds as the best entry point at this stage. “As far as starting the SIP is concerned, I think multicap fund is the best category to enter now,” Singh said in an interview with Business Today TV.
He highlighted the importance of understanding an investor’s financial situation, taxation category, and asset mix before investing. “We have to look at the investors — who are the investors, who are into which asset, which category of taxation,” he explained.
Singh also pointed out that conservative hybrid funds could become more attractive under the new ₹12 lakh income tax rebate scheme, as they offer a balance between equity and debt exposure. “With the ₹12 lakh (income tax rebate) scheme coming in, there will be a huge universe for getting into conservative hybrid also, which is putting up to 25% in equity and remaining into the debt and high-quality debt,” he said.
Singh suggested that any future tax changes allowing 10-15% arbitrage allocation would make these funds even more tax-efficient. “That will be one of the best categories to be in,” he added.
‘FIIs will come back for sure’
Amid concerns over Foreign Institutional Investors (FIIs) pulling money out of Indian markets, Singh remains confident that they will return once global uncertainties settle. “The way the smooth selling and smooth taking out of money has happened in India will bring in more confidence into FIIs today,” Singh said.
Comparing India to China, he noted that foreign investors cannot exit Chinese markets as easily. “You can’t sell in China and pull out your money, nobody will allow you to do that. But here, people have sold it, taken the money out, and they will come back,” he explained.
With the Indian rupee already depreciated, Singh believes this will reduce currency risk for returning FIIs, making India an attractive destination again. “They (FIIs) will come back with the same amount, they will buy. So they will be in a different position, currency risk will be lesser because we have already depreciated,” he said.
Singh expects the return of FIIs once global uncertainties, especially around the US political landscape, stabilise. “It’s a matter of time — once these settle down, the money will start coming back for sure,” he asserted.
'Volatility is part and parcel of investing'
Speaking on the recent fall, the deputy MD said market volatility is part and parcel of investing, and SBI Mutual Fund is always prepared for downturns. "If we talk about SBI Mutual Fund, we always take care of this thing that we should definitely take care of the drawdowns during the downside. How much you are negative when the market is negative by a percentage point — that is the key area, that is the key which tells you the quality of assets you are holding for the investors,” he explained.
Highlighting SBI MF’s performance during the last three to four months of market downturn, Singh stated that the fund’s fall has been much lesser than the broader market decline. “That is where our responsibility to check the downfall is there. The whole mutual fund industry would like to do that,” he added.
‘Markets will recover, investors remain confident’
Despite a decline in Systematic Investment Plan (SIP) inflows, Singh praised investors for staying disciplined during the market downturn. He noted that while fluctuations naturally make investors anxious, the broader sentiment remains strong and resilient.
"In markets, fundamentals, sentiments, the behavior — we all are human beings. When I look at my valuation on any particular day and if it falls, so definitely it will impact me because I keep on thinking that this money is my money. Now today, my net worth is down, and when net worth goes down, everybody feels nervous,” Singh acknowledged.
However, he commended investors for not panicking and maintaining confidence in the market’s recovery. “But I will compliment the investors in general — I’m not talking about any individual example. Generally, the investors have shown very, very disciplined behavior, and the panic button has still not been pushed. People are aware that the market is falling. The market has fallen, fallen more than expected, but yes, it will come back. People have confidence,” he asserted.