SBI Mutual Fund, the asset management arm of State Bank of India, manages a portfolio of more than Rs 11 lakh crore. DP Singh, Deputy MD & Joint CEO, says foreign institutional investors (FIIs)—which have sold shares worth Rs 1.50 lakh crore approximately this financial year alone—will return once global uncertainties surrounding the new US administration subside. He also talks about why people have confidence in the Indian markets. Edited excerpts:
Q: When markets are volatile, what are the dynamics of the mutual fund industry? What is your view on FII selling?
Markets are volatile by nature, so we are always prepared for that as a fund house. This downturn, which happened in the last three-four months, has indicated that our fall has been generally much less than the market fall.
I also feel that fund outperformance is important in the market, but chasing outperformance always can be dangerous, as this increases the risk.
We must take care of the expectations of the people who are coming into the market, as not everybody is coming to take the highest risk. With FII selling, I am of the view that the moment the global uncertainties due to the new regime in the US are over, the FII money will start coming back. Also, the currency risk in India will be lesser now as the rupee has already depreciated.
Q: Did you feel that they are more nervous since the folios have fallen, and SIP numbers have reduced?
It is only natural to feel affected by falling valuations in the markets. But I will compliment the investors in general. They haven’t panicked and have shown a disciplined and strong approach. People have confidence in the Indian markets.
Q: Do you feel that investors should exit mid- and Small-caps?
Some fund managers have cautioned against mid- and small-cap investments in the current market. However, recent correction has allowed portfolio rebalancing, with exit from certain stocks and strategic entry into others.
While some illiquid stocks persist, quality remains key across market segments. Despite daily fluctuations, mid-caps continue to outperform, indicating that select opportunities still exist for investors focusing on a quality portfolio.
What’s your advice to new investors who want to start SIPs?
For new investors in mutual funds, multi-cap funds offer an optimal entry point, balancing risk and opportunity in equity. Multi-cap funds remain the best choice, offering flexibility across large, mid, and small caps. With Nifty 50 dominating market capitalisation, a diversified approach is essential.
Those seeking a cautious approach can consider multi-asset allocation funds for diversification. Additionally, with recent tax relief on Rs 12 lakh income, there will be a huge universe for conservative hybrid funds, which invest up to 25% in equities and the rest in high-quality debt.
What will be the biggest trend in the mutual fund industry going forward?
The mutual fund industry has gained positive momentum over the past decade. Awareness and acceptance of mutual funds as a reliable investment option have grown significantly, reinforcing the belief that “mutual funds are right.” However, the next step is even more critical for determining what is right for each individual investor.
Investment needs vary from person to person. What may be suitable for one investor might not be the best for another. This makes personalisation and investor-centric advisory key focus areas.
The challenge lies in going deeper, understanding individual financial goals, and ensuring that investors are guided toward products that truly align with their needs.
Do you think the Rs 250-rupee SIP initiative by the Securities and Exchange Board of India will be viable for the mutual fund industry?
The Rs 250 SIP initiative is a step towards financial inclusion. While some fund houses have raised concerns about covering costs, this is not a major issue. Costs can be managed, and fund houses have the flexibility to cross-subsidise. A significant portion of the population, particularly at the lower end of the economic pyramid, is yet to participate in the equity market. As they begin investing, India’s large population and democratic framework can become a strength.
@Riddhima765
