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    ETMarkets Fund Manager Talk: SIP flows may slow down if market returns remain flat next 6 months: Vivek Sharma, Estee Advisors

    Synopsis

    "We rely on a data driven approach to select stocks. With years of research experience in constructing factor based portfolios, we have been able to help our investors tide these volatile times. Over the last couple of years, we have been investing heavily in expanding our capability in AI-ML research for capital markets."

    Vivek Sharma-Estee Advisors-1200 ETMarkets.com
    A considerable rise in the equity inflows through systematic investment plans (SIPs) in the last couple of years are good for the longer run, but in the short run, they will be a function of market movements, said Vivek Sharma of Estee Advisors, a quant-based investment management firm.

    “If the markets remain flat for another 3-6 months, we will see this (SIP) interest going down,” the smallcase manager and director at the investment management firm told ETMarkets in an interview. Edited excerpts:


    How did you fall in love with equities – what was the turning point?
    Way back in college, I along with one of my friends used to track the markets and create our own virtual portfolios on moneycontrol.

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    Since the markets were booming, I got a false sense that I am good at picking stocks. After passing out of college, I got placed in a software company but my heart was in markets.

    While looking out for opportunities, I came across Futures First, which traded in global markets and was looking to start an energy trading desk.

    I was the first crude oil trader and was profitable from day 1. In Futures First, I got to work alongside some of the best traders in India and the world, and that was a huge learning for me.

    Over the last 8 years or so, I have made two transitions, one moving from energy trading to equities, and the second, moving from discretionary to algorithmic approach.

    So, the year 2022 has been a rollercoaster ride for investors as well as fund managers with too many variables impacting the Indian market. How are you managing the volatility in your fund?
    We rely on a data driven approach to select stocks. With years of research experience in constructing factor based portfolios, we have been able to help our investors tide these volatile times. Over the last couple of years, we have been investing heavily in expanding our capability in AI-ML research for capital markets.

    How much AUM do you manage and how has the fund performed so far in 2022?
    The total assets under management (AUM) that we manage is about Rs 700 crores across PMS and smallcase portfolios.

    So far in 2022, our flagship Gulaq Gear-6 portfolio has been able to generate about 15% alpha over the multi-cap benchmark.

    SIP contributions have increased significantly which is a positive sign for Indian markets. Do you see the trend continuing? Any ballpark figure you see by the end of FY23?
    The knowledge and interest level has improved immensely over the last 2-3 years. This obviously was the impact of the kind of returns equity markets have generated.

    Over the long run, this is a very good development. But over the short run, it will be governed by the performance of the markets.

    If the markets remain flat for another 3-6 months, we will see this interest going down. So, the SIP contributions would be a function of markets in the short-run.

    Why do you think FIIs are selling the best performing market? When will this trend reverse?
    The expectation in the market is that the interest rates will be much higher from where they are. What this leads to is that capital starts to move out of riskier assets to safer assets.

    In the earlier regime of low interest rates, there was hardly any competition for equities, but now with higher interest rates that has changed.

    Another reason is that higher interest rates impact equity valuations because the risk free rates are used to discount the cash flows.

    While India is very well placed and the impact on our markets will be much more muted, we should not expect our markets to go up when the US and Europe are on the brink of recession.

    What cash levels are you sitting at – are you putting aside more cash to be deployed later?
    We don’t take calls on markets and, hence, are always invested fully.

    What are your top holdings, and did you rejig your portfolio recently?
    Some of the stocks that we have recently added are Westlife Development, Ruchi Soya Industries, and KSB.

    We are overweight on industrials and consumer discretionary and underweight on IT and financials.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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