President of India, Franklin Resources Inc
Sapphire Equity Long-Short SIF | In Conversation with Avi Satwalekar and Juzer Tambawalla
About Avinash Satwalekar
Avinash Satwalekar, President of Franklin Templeton India, has been discussing market volatility, investment products, and India's economic outlook in recent appearances. In an April 2026 conversation about the Sapphire Equity Long-Short SIF, Satwalekar said that the current volatility is "not unusual" and that markets go through phases every three to five years, though they appear to be happening more quickly. He described Specialized Investment Funds (SIFs) as filling a gap between mutual funds and Portfolio Management Services, noting that they allow for derivative use beyond hedging, including "0-25% naked shorts," and require a minimum investment of 10 lakh rupees. Satwalekar stated that investors are increasingly focused on using volatility as an opportunity rather than being victims of it. Speaking at EVOKE 2026 in March, Satwalekar addressed India's global position, saying that while foreign investors have pulled out money, they have also invested significantly, and that much of the outflow is due to private equity funds exiting after taking companies public. He said India's oil dependency has decreased by about 27%, and that oil is expected to stabilize around $90 per barrel on average for the year. In a separate March interview with Moneycontrol, Satwalekar advised investors to "stay calm" during volatile markets, focus on long-term goals, and continue systematic investment plans (SIPs), which he said were designed for such conditions. He also expressed confidence in the financial sector, stating that a strong financial system is core to any economy and that nothing has changed regarding the long-term growth outlook for Indian banks.
Transcript (19 segments)
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Interviewer0:09
Good morning, Avi. Thank you so much for joining us today. As I was preparing for this conversation, I think we're seeing a very different world, perhaps something that we've not seen in the recent past. The amount of volatility we've seen in the markets, cycles have gone significantly shorter. I also feel that investors are now not ready, or rather not very happy, to accept a one-size-fits-all product. They're looking at something special that can suit their risk profile. I just want your thoughts on this.
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Avinash Satwalekar0:48
Well, firstly, I don't think the volatility we are seeing is unusual or new. I think the markets go through a phase every three, four, or five years. It just seems like that is happening a lot quicker now.
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Interviewer1:06
Right. So we would say black swan events occur once in a hundred years, but we seem to be having those regularly.
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Avinash Satwalekar1:16
So either swans are breeding at an incredible pace, or we're just seeing a different... or all white swans are becoming black now.
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Interviewer1:22
That also is a possibility.
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Avinash Satwalekar1:25
No, so your question about investors, right? I think what investors are trying to do is really navigate through all this volatility. And I think trying to find ways where if we are in a volatile environment, how do we then take advantage of both sides? I think that's where investors are more focused on saying, okay, you know what, how can we use this potentially as an opportunity rather than be a victim?
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Interviewer1:53
So you're essentially saying that investors are now saying that we're seeing the volatility a lot more often, and therefore we need to think of ways to take advantage of that volatility. And obviously today we're launching the Sapphire Long Short Equity Fund from Franklin Templeton's basket. How does that fit in the current state of the investor's mind? So what does a long short do? It essentially is looking at two sources of alpha, right? You've got the long portion and the short. Now, how is that different?
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Avinash Satwalekar2:31
Historically, we've only had long as an ability to generate alpha. I think in the last, I'd say last five years, right? Even just in the last two years, the geopolitical scenario around the world has changed dramatically, which has led to extremely high volatility. And that, I think, is one of the reasons why trying to have both sides of the trade makes sense.
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Interviewer3:02
Got it. So would you therefore then say that a product of this kind, in the structure that it's come out with, is perhaps a little bit more for an evolved investor? Or is it for somebody who has perhaps been a little bit of a new investor in the market?
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Avinash Satwalekar3:26
No. So let's put it this way. SIFs are a higher level of risk, and therefore when you say an evolved investor, it has to be somebody that has the ability to take on that additional risk. And where's that risk coming from? It is the usage of derivatives. And therefore, the regulators have done an excellent job of actually setting the threshold a little higher, where you need to have a 10 lakh minimum investment in order to do that. So when you say evolved, it is, I would say, more of someone that has the risk appetite. But interestingly, the product actually can be used more from a risk mitigation standpoint. So it fits that, but given that there is a usage of derivatives, you need to be a little more cautious on that.
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Interviewer4:14
So you know, there's a long portion in these kind of funds, there's a short portion. If I'd be a little tongue-in-cheek, long story short, why should an investor really look at something of this kind? Or who should be the kind of investor who should be looking at a fund of this sort? What is the kind of investor that would be ideal for this fund?
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Avinash Satwalekar4:35
So there's two buckets, right? Most of us are long-only investors, so if we're looking for a risk mitigation in our long-only strategy, that would be someone that would be interested in this. The second would be someone that is looking to hopefully benefit from both cycles. And when I say both cycles, both bull cycles as well as bear cycles. Given that you're long-only, you benefit from the bull cycles potentially, and in a bear market up until now, you couldn't benefit. So this allows you to do that as well. So through both cycles, hopefully you have the ability to generate outcome.
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Interviewer5:12
I mean, another question that's come up often when I talk to investors and distributors is that where do SIFs really sit within the larger basket of pooled investments? You've got mutual funds, you've got PMS, you've got AIF. What do you think would be the reason and the objective of introducing SIFs somewhere in the middle over here?
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Avinash Satwalekar5:32
When you look at all those products, right? What are the distinguishing factors? The key distinguishing factors are both size of investment, and that's predicated on your ability to take risk. So mutual fund is right at the lowest initial starting point in terms of you can start with 500 rupees, 1,000 rupees, etc., all the way up to an AIF which requires you a one crore investment. And why is that? Because in an AIF you can take a higher level of risk. So the theory is that the higher the net worth, the ability to take risk is more. PMS is slightly less than that, it's at 50 lakhs, you have differentiated strategies. What SIFs are doing is introducing that gap in between, right? Between 500,000 rupees to 50 lakhs, regulators have introduced a 10 lakh bucket that allows people that are on that journey, have a little more of a risk appetite but haven't quite reached the 50 lakh. And so it's actually a great start. And the fact, I think, that today derivatives in mutual funds are used only for the purpose of hedging, versus the ability to use some level of derivatives for actually looking at generating returns in the portfolio in a bear market is what we offer.
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Interviewer6:50
So when you talk about using derivatives, you're talking about naked shorts in a long-short fund, right? So you have 75 to 100% long potential and you have 0 to 25% short. That short potential is going naked, which is being introduced for the first time.
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Avinash Satwalekar7:09
Long story short, it's a fund which allows you to capitalize on opportunities in the bull market as well as in the bear market, be agile in that entire investment process, and have the ability to invest in a fund which has an outcome-oriented approach to investing.
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Interviewer7:28
Great. Thank you so much for this quick short insight in a long-short fund. And of course, we're calling our brand Sapphire, and I'm hoping that Sapphire actually shines bright for the investor, for the distributor, and also for Franklin Templeton. Thank you once again, and hopefully we catch you on another conversation very soon.
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Avinash Satwalekar7:50
Sounds good. Thank you. Pleasure.
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Narrator7:57
Investments in specialized investment funds involve relatively higher risk, including potential loss of capital, liquidity risk, and market volatility. Please read all investment strategy-related documents carefully before making the investment decision.