Asset management companies are back with their equity-linked products taking advantage of the market volatility as they feel it is a right time to invest.
In the past two months, around eight fund houses have made draft filings for approvals for over a dozen equity-linked schemes with the market regulator Securities and Exchange Board of India.
Recently, Sundaram Mutual launched Sundaram Equity Fund, an open-ended equity scheme investing across large cap, mid cap and small cap, whereas Motilal Oswal AMC launched four passively managed index funds – Midcap 150 Index Fund, Nifty 500 Index Fund, Nifty Bank Index Fund and Nifty Small-cap 250 Index Fund, with all funds tracking their corresponding index on the National Stock Exchange.
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Pratik Oswal, head of passive funds, MOAMC, said, "The idea behind launching four funds at a time is to introduce the concept of asset allocation for the customers to understand which is the best product for them."
The index funds are all equity-linked, and Oswal said that "the best time to buy is when everyone is selling and vice versa."
According to him, the markets have corrected a lot and good buys are available at a much better cost than what it was 2-3 years ago.
"Looking at the valuations, we think this is a great time to invest when the market is down, especially in small and midcaps. As long as an investor is investing for 8-10 year horizon, investing through the SIP route, a bear market should not matter," Oswal said.
However, given the current volatility n equities, portfolios of many investors have given negative returns.
S Krishnakumar, CIO -- equity, Sundaram Mutual said one should not time the market.
"The market has gone through a fair amount of volatility, we have seen a slowdown in certain sectors. But we think the investment cycle will pick up in the next 12 months. The valuations are reasonable now and we think this is the right time to make investments," Krishnakumar said.
Sundaram filed for the product in January and received Sebi's approval soon after. However, it decided to delay the launch as the time was coinciding with the election period, and the fund house made a reapplication for the new fund offer again in May.
"We decided not to go ahead with it at that time (election period) since sentiments were uncertain at that time. Apart from this, we never timed a launch," he said. Usually, a fund needs to be launched within six months of receiving approval.
Another equity fund manager said it makes more sense to "exploit the current market situation" in order to maximise wealth.
"While investors should continue with their investment plans, instead of going by the market conditions, for long-term investors this is a good time to buy, especially large caps where valuations look attractive, thanks to the market corrections," the fund manager said, adding that more fund houses will try to take advantage of the prevailing market condition to launch equity schemes.