Top Fund Managers Advocate for Disciplined Asset Allocation in Turbulent Markets and Slowing Economic Growth

Market Experts Caution Against Taking Extreme Risks Amid Volatility

India's top mutual fund executives and investment strategists have called for disciplined asset allocation and long-term investing in the face of volatile global conditions. Speaking at the Moneycontrol-Dezerv Wealth Summit 2026, Kalpen Parekh, MD & CEO of DSP Mutual Fund, R Sivakumar, CIO at Axis Asset Management Company, and Rajeev Radhakrishnan, CIO Fixed Income at SBI Mutual Fund, discussed the outlook for equities, debt, gold, and hybrid investment strategies.

According to Kalpen Parekh, the Indian market is currently in a "middle phase" where neither valuations nor returns are likely to be extreme. He noted that Indian equities have delivered healthy long-term returns, with a 10-year rolling average of 13 to 14 percent. However, expectations have become unrealistic, leading to disappointment among investors. Parekh argued that equities are no longer extremely expensive but are still trading slightly above fair valuations, at around 18 to 19 times earnings.

Parekh emphasized the importance of maintaining debt exposure within portfolios, citing the need for fixed income to help investors stay invested during volatile periods. He cautioned against excessive portfolio churn and frequent switching between funds, stating that this can lead to lower returns. Parekh also recommended allocating more toward equity funds during deeply corrected markets, preferring multi-asset funds during moderate valuation phases, and moving toward dynamic asset allocation funds when markets become expensive.

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Table: Valuations and Returns Comparison

R Sivakumar noted that Indian markets have undergone a significant cyclical slowdown over the last few years due to aggressive fiscal consolidation and monetary tightening after the pandemic. However, he believes the macro environment is now gradually turning positive, with nominal GDP growth expected to return toward 12 percent levels. This could lead to a more favorable assessment of Indian equities by foreign investors.

Sivakumar also defended tactical asset allocation strategies, stating that investors should not blindly avoid valuation-based decisions during volatile phases. He noted that mutual funds now offer both static and dynamic asset allocation products, allowing investors to choose approaches based on their risk appetite and investment style.

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Rajeev Radhakrishnan emphasized the importance of debt despite adverse taxation rules and concerns around rising global bond yields. He noted that global bond yields have risen sharply and debt markets have already priced in significant rate risks. Radhakrishnan suggested that investors seeking debt exposure with better tax efficiency could consider hybrid and multi-asset mutual funds rather than aggressively moving into high-risk credit products.

Key Recommendations

• Maintain debt exposure within portfolios to help investors stay invested during volatile periods.
• Avoid excessive portfolio churn and frequent switching between funds.
• Allocate more toward equity funds during deeply corrected markets, preferring multi-asset funds during moderate valuation phases, and moving toward dynamic asset allocation funds when markets become expensive.
• Consider hybrid and multi-asset mutual funds for debt exposure with better tax efficiency.