Market volatility often triggers panic, but is that the best time to invest? A. Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC Ltd, certainly thinks so. In an interview with Business Today, he explains why corrections create long-term opportunities, how systematic investment plans (SIPs) help investors stay disciplined, and which fund categories are best suited for today’s market conditions. He also shares his insights on what to expect from market regulator Securities and Exchange Board of India (Sebi) under new Chairman Tuhin Kanta Pandey. Edited excerpts: After a record five-month decline on the Nifty, will things get better, or will the pain continue? Indian equity markets hit record highs [earlier], but valuations stretched beyond fundamentals. Meanwhile, domestic savings continued to flow into the markets, adding to the valuation stretch. The recent correction has been fuelled by global uncertainty—tariff-related discussions, inflation concerns, and unclear policy direction on interest rates. This sharp fall impacted individual investors more than mutual funds, which have, in fact, benefited from diversified exposure. Other factors continuing to impact markets are slower government spending due to Lok Sabha elections last year, the Reserve Bank of India’s tightening of credit growth to curb a potential bubble, and overall economic growth moderation. However, India’s fundamentals remain strong—tax collections are healthy, the fiscal deficit is improving, interest rates and currency remain stable, and GDP growth has exceeded expectations. There are possible signs of bottoming out in the market, and even though volatility may persist, India’s long-term growth narrative remains intact. Have you seen any unusual redemptions or reduction in SIPs? Market volatility sometimes leads investors to stop SIPs, especially first-time investors. In contrast, seasoned investors—who have seen multiple cycles—tend to stay invested or even increase contributions, recognising the opportunity. Is this the right time to invest in equity via mutual funds? The best time to invest is when there is fear, and the best time to exit the market is when there is greed— even though no one can time it perfectly. The Nifty has corrected. India’s growth rate is stabilising at 6.25–6.75%, with government capital expenditure gaining momentum alongside private investments. While corporate earnings may see one more quarter of pain and market volatility may persist, investors should focus on building a long-term portfolio. Which fund categories do you expect to perform well this year? Lately, the market has been leaning towards large-cap funds, with fund houses backing them along with flexi-cap and frontline equity funds. Investing in big, stable companies is a solid strategy since they can adapt to changing global conditions and sustain long-term growth. With all the ups and downs, two funds stand out for investors: Balanced Advantage and Multi-Asset Allocation. The Balanced Advantage Fund shifts its equity exposure based on market trends—around 48% (at the time of the interview), but it can go up to 65-70%. Multi-Asset funds invest in equity, debt gold as well as real estate investment trusts. Hybrid funds help tide over market fluctuations, making them a great option for investors who don’t want too much volatility. And if you’re investing for more than five years, small- and mid-cap funds are worth considering. Do you believe gold and silver exchange-traded funds (ETFs) will continue to see more inflows? Gold has long been a trusted asset class for not just individuals, but also institutional investors, who continue to allocate large sums to the category. However, when it comes to long-term wealth creation, equities hold the edge. While gold’s price fluctuates based on demand and supply, equities generate value over time. A strong portfolio should include some exposure to gold and silver but remain equity-focused for sustainable returns. As investors, it’s essential to look beyond short-term gains and build a strategy centred on growth-oriented assets like equity and hybrid funds. What is your expectation from the new Sebi chief? The new Sebi Chairman [Tuhin Kanta Pandey] is a strong choice, given his understanding of capital markets. As a former finance secretary and secretary of the Department of Investment & Public Asset Management, he played a key role in restructuring public sector companies and led LIC’s landmark IPO. He also introduced Bharat ETF bonds.His experience with the finance ministry and capital markets positions him well to build on the strong regulatory framework established by his predecessors. @sakshibatra18
