AMCs that create value for investors will grow: DSP Mutual Fund MD & CEO

I have been an investor since 1998, and in both the best and worst of times, there has never been a day without worries or opportunities, says Kalpen Parekh, MD and CEO of DSP Mutual Fund (MF)

Attractive opportunities at the current market levels are fewer, and fair or cheap valuations even scarcer, says Kalpen Parekh, managing director and chief executive officer of DSP Mutual Fund (MF), in an email interview with Puneet Wadhwa. Edited excerpts:

 

Have the markets run ahead of fundamentals?

 

I have been an investor since 1998, and in both the best and worst of times, there has never been a day without worries or opportunities. That said, valuations are evidently high. For June 2025, Nifty 50 aggregate earnings are expected to grow around 4.6 per cent year-on-year, whereas price-to-earnings multiples of 25x to 30x in different segments of the market actually imply a 15–20 per cent profit growth. So, actual growth is much lower than what current valuations suggest.

 

The recent US tariff announcements led to a notable correction in Indian markets and exposed the risks of running ahead of fundamentals. The key triggers for higher volatility now include tariff uncertainty, persistent foreign institutional investor selling (even though it has been partly offset by strong domestic retail buying), and a weaker currency, among others.

 

Should investors put money in sectors impacted most by the recent US tariff decision as a contrarian play?

 

The sharp market reaction to the US tariff on textile and jewellery exports reflects genuine concerns, and these sectors face real operational headwinds. While contrarian investing has its place, these industries are best approached cautiously until there is clear progress in US-India negotiations. For most investors, diversification and steady asset allocation remain wiser than bold sector bets, which can entail significant short- to medium-term risk.

 

How do you see flows to the debt MF segment pan out in the next 12 months?

 

We have always advocated balanced investing across asset classes. Long-term bonds were attractive two years ago when yields were higher, but yields have since fallen by around 150 basis points. Looking ahead, active debt funds with clear guardrails for duration and credit risk make sense.

 

Retail investors are unlikely to switch en masse from equity to debt; the monthly ₹25,000 crore equity systematic investment plan (SIP) flow means almost ₹3 trillion a year into equities, mostly from retail investors.

 

More flows into debt funds are likely from high-networth individuals and corporate treasuries, while retail investors often access debt exposure indirectly through hybrid and multi-asset funds.

 

How difficult is it for a fund manager to find investment-worthy opportunities now and beat the markets?

 

Attractive opportunities are fewer, and fair or cheap valuations even scarcer, but most of our flows come through SIPs and asset allocation, so we’re not in a rush to deploy capital daily. We encourage investors to invest steadily over time.

 

Is there room for more players in the industry, or do you see consolidation ahead?

 

Competition is good for investors. What’s good for investors is good for our industry. Asset management companies (AMCs) that create value for investors will grow — that is the Holy Grail. It won’t matter whether we are old or new; what will matter is whether we are valuable.

 

The Securities and Exchange Board of India (Sebi) has proposed allowing MF houses to launch a second scheme within the same category. Equity MF schemes, reports suggest, may soon be allowed to dabble in gold and silver. How do you view these proposals? 

 

We already have enough funds. Sebi’s scheme classification brought immense value, enabling investors to make meaningful, apples-to-apples comparisons. Adding more schemes within the same category could confuse investors further rather than help them make better decisions.

 

How can an investor navigate these uncertain times via the MF route?

 

Historically, when valuations have been high, hybrid and multi-asset portfolios tended to earn closer to equity market returns with lesser fluctuations in their net asset values. They make sense for investors who don't like extreme price fluctuations. However, the price to pay would be slightly lower returns if you are a very long-term investor.

 

Multi-asset funds invest in global stocks, and we like this category as it solves an important dimension for investors — they don’t need to actively move in and out by chasing performers of last year. Instead, these funds will mostly own them.

 

Multi-asset funds also invest in precious metals and are good investment vehicles for their disciplined and diversified design, yet they can also go through fluctuations. 

The fine art of balance: Mastering debt flows

 

Diversify smartly: Balanced investing across asset classes essential

 

Bond fade: Long-term yields drop about 150 basis points, reducing bond appeal

 

Guarded growth: Active debt funds with tight duration, credit guardrails recommended

 

Equity anchor: Retail unlikely to exit equity; SIP inflows sustain ₹3 trillion yearly

 

Big-money movers: HNIs, corporate treasuries drive most debt fund inflows

 

Indirect access: Retail accesses debt via hybrid, multi-asset funds