By Nesil Staney
The entry of BlackRock into the Indian mutual funds market has led to concerns that the market shares of dominant players could change, according to Avinash Satwalekar, President, Franklin Templeton (India).
“They’re different. Our approach is different and our strategies are different. What we focus on is the market opportunity in front of us. It is a very under penetrated market. The bigger game is expanding the pie, and that’s what we’re trying to do,” Satwalekar told FE.
The Templeton chief believes India is some time away from replicating the mutual funds history in US which has seen big growth in passive schemes given the market’s ability to create alpha from actively managed funds. “The US has had a major shift in the way it approached equity ownership in the late 70s, early 80s and now a good chunk of flows is in passive schemes,” he said.
Satwalekar believes that while passive schemes will become big in India, though that is still some time away. He points out that while there is limited potential to generate alpha for large cap active-funds there are opportunities in mid-cap and small-cap segments. “In the US, there is a lot less scope to create alpha,” he said. According to Satwalekar, capital markets are essentially there to facilitate price discovery. “If passives become the dominant flow, it is no longer price discovery, it is flow that drives the price,” he said.
The percentage of the funds generating ‘alpha’ against their benchmark, is quite meaningful. Active management as a practice is able to show some value to investors and attracts more flows, he said. Franklin had assets under management of Rs 1.18 lakh crore on average in June 2025 across 35 schemes.
Templeton has been trying to increase the number of women distributors. “Women investors think differently and there is room for products catering to them,” he said, pointing out that the share of women in the workforce is going up.