'As market matures, active and passive strategies will co-exist'

How is your team viewing the current market valuations and preparing for possible corrections?

While the market has seen significant appreciation in recent years, leading to higher valuations in certain sectors, we continue to find attractive opportunities where valuations remain reasonable. The strength of India's macroeconomic fundamentals supports these opportunities, with strong growth potential across various sectors.

Rather than trying to time the market, our investment process at Groww Mutual Fund focuses on disciplined portfolio construction. We carefully consider valuations to mitigate potential risks and market volatility, ensuring a long-term, growth-oriented approach while maintaining resilience against short-term corrections.

Are index and factor-based passive funds a fad or a lasting investment strategy?

India's equity market is evolving, with more investors exploring equities as part of their long-term savings strategy. This broadening participation means that all investment products, including passive funds, are finding increasing demand.

We believe that passive strategies will continue to play a complementary role in the investment landscape, meeting the diverse needs of investors. As the market matures, active and passive strategies will co-exist, offering different benefits based on individual goals and preferences​.

Will AI impact your business? How and why?

We use AI in quantitative and qualitative analysis of the investment process. While quantitative analysis has already been largely automated, AI enhances our ability to process qualitative data, improving decision-making and productivity. We are also using AI for content creation to educate customers and in tech developments to enhance internal and operational efficiency. Additionally, AI helps us better understand investor preferences, enabling more tailored product offerings.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Clarity of thinking and discipline.
  
• The biggest mutual fund myth you'd debunk.
  That active and passive strategies cannot coexist effectively in portfolios.
  
• An unconventional asset class you'd add to your portfolio.
  Foreign equity.
  
• A Bollywood movie that best represents the mutual fund industry today.
  Not a movie but a game show: Kaun Banega Crorepati. Just as everyone on the show has the potential to become a crorepati, the market offers that same possibility to all investors. However, only those who have the discipline to stay invested through the market's ups and downs are the ones who truly win.

This article was originally published on October 26, 2024.