SIP flows up in March, deploying more cash amid market corrections: FT MF

Asset management firm Franklin Templeton has witnessed higher systematic investment plan (SIP) flows in March compared to February despite the dent to investor sentiment because of the West Asia conflict, a top company official said on Thursday.

Even as widespread concern exists about how long the conflict will last and the subsequent recovery, the company is taking advantage of the dip in share prices to buy scrips, rather than preferring to hold cash across its schemes, Franklin Templeton Asset Management India president Avinash Satwalekar told reporters here.

SIP flows for the industry are set to decline further in March from February's Rs 29,845 crore because this has been the historical experience where any concern lead to a relook into SIPs, he said.

However, citing conversations with senior management earlier, Satwalekar said SIP flows have increased for schemes managed by FT but declined to specify the factors that are helping the company.

"If we find names that we like that are getting cheaper, we will put more capital to work," he said.

On the quantum of cash it is choosing to carry and how the proportion compares with the pre-conflict period before February 28, Satwalekar said proportion will be much smaller.

"It (cash) should be less because this is the kind of market we thrive in. We start deploying (the cash)," he said.

Satwalekar explained that over the last three decades, every crisis has resulted in a correction followed by a sharp recovery, which yields handsome results for investors who enter at low levels. He exuded confidence that the conflict started after the US and Israel's attack on Iran will be no different unless it escalates into a World War-like scenario.

Corrections in the indices have brought down large cap stocks' valuations, making them more interesting for buyers, he said, adding that the fund house feels that earnings growth over the next three years will again push valuations higher in such stocks once the conflict is over.

Additionally, large companies are better placed to handle the conflict's impact compared to others, making them a better investment option.

In contrast, the valuations in small and mid cap stocks have not corrected by as much, and stocks in the segment continue to be higher than the mean.

FT on Thursday launched its maiden Specialised Investment Fund christened 'Sapphie Equity Long-Short SIF', which will allocate up to a fourth of its holdings to short positions.

Satwalekar said this is an opportune time to launch an offering like this because of the return possibilities in a volatile market like the current one. The new fund offer for the offering will be open between April 10 and 24.