HDFC Asset Management Company (AMC) Managing Director and CEO Navneet Munot has cautioned investors against making investment decisions based on recent market momentum, particularly in the wake of record inflows into gold exchange-traded funds (ETFs) and post-Budget recalibrations in equity markets. Munot’s remarks came after the HDFC Flexi Cap Fund surpassed ₹1 lakh crore in assets under management (AUM), a milestone the firm attributes to a three-decade commitment to a research-led investment process.
Munot emphasized that the fund’s size is relative to the expanding Indian market capitalization, bolstered by latest listings and a robust primary market. He noted that the recent easing of US-India trade tensions and the conclusion of the Union Budget have shifted market focus toward corporate earnings recovery, citing improving consumption demand, resilient macroeconomic growth, and easing export pressures as positive indicators for corporate profitability.
However, Munot stressed that his optimistic outlook on India is rooted in structural factors rather than short-term triggers. He pointed to ongoing transformations in formalization, digitization, financialization of savings, and supply-chain realignment as key drivers of long-term growth. He similarly highlighted the strength of corporate balance sheets and the receding stress in the banking sector, which he believes will encourage sustained private capital expenditure alongside continued public infrastructure investment. The increased depth and breadth of Indian equity markets, with greater domestic participation, further supports this outlook.
Addressing the recent surge in gold ETF inflows, Munot warned against momentum-driven asset allocation. While acknowledging gold’s role as a hedge against macroeconomic risks and for portfolio diversification, he cautioned that it should not be considered a substitute for productive assets like equities. He suggested that an excessive allocation to gold solely based on recent performance could hinder long-term wealth creation.
For balanced investors with a five-year-plus investment horizon, Munot advocated for a multi-asset approach rather than rigid percentage allocations. He explained that asset classes perform cyclically, with equities, debt, and gold each having periods of strength. He championed the use of Multi Asset Funds, which dynamically adjust exposure based on valuations, macroeconomic conditions, and risk-reward assessments, as a means of participating in growth opportunities while mitigating volatility.
Regarding investment strategy in an environment of uneven earnings growth, Munot recommended a staggered allocation through systematic investment plans (SIPs) and diversified funds, rather than attempting to time the market by holding excess cash. He cited the market adage that more money is lost waiting for corrections than during the corrections themselves, emphasizing the importance of consistent, long-term investment.
The HDFC Flexi Cap Fund, launched in January 1995, dynamically allocates investments across market capitalizations and sectors, aiming for long-term wealth creation. The fund has navigated various market cycles over its 31-year history, remaining anchored to its research-led investment process, according to HDFC AMC.