ET Wealth Expo: In uncertain markets, investors can control only consistency and quality of their inputs, says Swarup Mohanty, Mirae Asset MF

Market performance is inherently uncertain, and even the most experienced fund managers cannot control its direction. Investors should therefore focus on the aspects they can influence: the consistency and quality of their investment decisions, said Swarup Mohanty of Mirae Asset at the ET Wealth Expo.

Speaking during a panel discussion on MFs, PMS, AIF, ETFs or Direct Stocks: What will work in 2026 and thereafter? Mohanty said investors often get caught up in deciding whether to choose actively managed funds or passive funds without first understanding their own financial needs.

He emphasised that personal finance must begin with the word ‘personal’, as every investor has a unique set of circumstances, financial needs and goals. Therefore, broad recommendations on choosing between active and passive funds may not be the right starting point.


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“What do you want to do with that money? Why are you actually investing? That is most important,” he said.

An investor’s financial goal should determine the asset allocation, and only after that should the decision between active and passive investing come into the picture, he said.

Mohanty explained that actively managed funds aim to outperform their respective benchmarks, such as the Nifty 50. However, the possibility of beating the benchmark also comes with the risk of underperforming it.

He cautioned investors against relying only on past performance while selecting funds. A fund that has performed well in one period may not necessarily continue to do so, while a fund that has lagged could perform better in the future.

“Investing is a 50-50 probability. When you are investing today, that fund which has performed has a 50% chance of not performing tomorrow. A fund which has not performed has a 50% chance of performing tomorrow,” he said.

Both active and passive investing have created wealth for investors, Mohanty said, referring to the approaches advocated by Warren Buffett and John Bogle as examples of how different investment philosophies can have merit.

Investors should first understand what they need from their portfolios before deciding on the mix of active and passive funds. He advised them to consult a financial adviser or read up on their investments, adding that investors who do not understand their money may struggle to make it work for them.

Mohanty said Mirae Asset follows a relatively simple investment approach: buying good businesses at good prices. If the fund house finds a business attractive and its valuation reasonable, it is willing to hold the stock as long as its investment conviction remains intact.

He said the fund house has been contrarian over the past two years and has stayed away from parts of the market where valuations have been a concern. He added that equity investors need to recognise that the short term can extend to three to five years, and a high-conviction stock may not perform during that period.

This approach, he said, is at odds with investor behaviour. Around 80% of the money, he pointed out, comes into funds based on their returns over the previous year.

Mohanty highlighted the disconnect between what investors expect from fund managers and how they select funds. Investors expect fund managers to identify businesses with the potential to become multibaggers before they are widely recognised. Yet, many investors themselves choose funds based on recent performance.

He urged investors to consider this contradiction rather than chase funds that have delivered the highest returns in the recent past. He also said that he is a strong proponent of thematic investing and believes that investment themes in India are evolving.

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He pointed to how the financial services sector has expanded over the years. Earlier, fund fact sheets would broadly refer to banks. Today, the sector encompasses banks, non-banking financial companies (NBFCs), financial services and fintech.

He believes that over the next 20 years, core banking and financial services will continue to be important themes, while healthcare could also expand beyond pharmaceuticals to include areas such as fitness.

Mohanty said the investment landscape is changing and investors should recognise that themes and opportunities can evolve over time. He added the fund house does not restrict itself to market capitalisation categories in the way investors may expect. Its approach is to offer different investment products, leaving investors to choose what suits their needs.

“Choose prudently is my humble request,” he said, reiterating that investors should focus on buying good businesses at good prices.

Mohanty also stressed the importance of looking beyond individual companies and understanding the broader sector environment.

Using the telecom sector as an example, he said he had tracked the industry for decades, but it remained weak for nearly a decade. Even though Bharti was a strong company with a competitive cost structure and a leadership position, its stock did not perform well because the industry structure was not favourable.

The example, he said, underlines why sector allocation is important. A good company may not necessarily deliver strong stock returns if the broader sector is going through a difficult phase.

He also pointed to how different sectors have led market performance in different periods. Consumption stocks performed strongly between 2010 and 2020, while the period after 2020 saw a change in market leadership.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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