Equity returns over next 3 years will not be as good as last three: Franklin Templeton MF

Janakiraman said market valuations are high because India is in the early stages of a growth phase, which will last nearly five years

Published - July 03, 2024 10:38 pm IST - Mumbai

Franklin Templeton. File.

Franklin Templeton. File.

Equity market returns for investors in the next three years will not be as good as the last three years, a senior official from Franklin Templeton MF said on July 3.

Its chief investment officer for emerging markets equity R Janakiraman, however, told reporters that the returns will be "respectable" and outperform other asset classes.

The comments were made on a day when the benchmark indices touched new all-time high and come at a time when concerns are being raised about the high valuations in the equity market.

Janakiraman said market valuations are high because India is in the early stages of a growth phase, which will last nearly five years, and also sought to address the concerns on too much money chasing too few stocks.

Pointing to the high number of initial public offers lately, he said the newly listed companies are creating the avenues to absorb the additional sums of money which are getting invested.

For the last few years, equity returns have been better than earnings growth in companies and the investors will have to be ready for it turning opposite now.

"There will be respectable equity returns over the next three years. It will not be as good as the last three years but it will be better than other asset classes," he said, while speaking at the launch of the asset manager's multicap fund offering.

Like peers, half of the assets under management will be invested in small and midcap stocks, he said, adding that the exposure to large cap scrips will act as a risk mitigant.

However, as India grows more, "we will see a lot of names in the small and midcap space gaining which underlines the importance of the segment for an investor," he said.

The asset manager's president Avinash Satwalekar said Franklin Templeton has crossed the ₹1 lakh crore assets under management milestone around ten days ago again. As of March, it was the 15th biggest asset manager in the country.

He also said that the company is mulling to launch multiple fixed income funds in this quarter, but declined to spell out any details.

The multicap new fund offering will open on July 8 and close on July 22, and a single unit will be available for ₹10.

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