'Holding periods have improved among investors'

Model-driven vs human-led portfolios?

We are in an interesting phase in the evolution of fund management. While advanced quantitative techniques have driven big changes in how fund managers work with data, the scope of engagement with machines has seen a remarkable step up with the introduction of AI and machine learning tools. Capabilities, which were once the exclusive domain of humans, have opened up a host of possibilities.

The ability to process unstructured information at scale and speed is remarkable. However, rather than replacing humans, this shift emphasises the need for change in the role played by humans. Their ability to add value through judgments, identify and imagine future changes, add governance filters and understand cultural nuances would continue to remain an edge. The future is not in competing with technology but in the unique benefits that it can bring to investors through active collaboration and integration.

Post-stress test safeguards?

As an industry, we have made significant strides in investor protection and disclosures. Stress tests introduced last year further strengthened the industry’s ability to withstand shocks.

At HDFC AMC, we’ve always treated fiduciary responsibility seriously and have strengthened our governance and risk frameworks. Our 360-degree portfolio evaluation through multiple templates and stress test scenarios ensures fund managers stay informed and take precautionary steps before reaching thresholds set by our risk team.

On low-friction investing and investor churn.

Early concerns about ease of transactions driving investor churn do not appear to have played out. An AMFI-CRISIL study shows that the average holding period for mutual fund investors has seen a sharp improvement. Assets under management held for less than two years reduced from around 70 per cent in March 2019 to around 45 per cent in March 2024, while those held for more than five years saw the highest increase.

Strong equity performance over the period would have helped, but better investor behaviour, as reflected in the rising share of SIPs, has been a key contributor.

Rapid-fire questions

• One AMC you admire (not yours): SBI MF’s investment team.
• One hot trend you’re glad to have skipped for your investors: Our product launches are driven by the investment team and not sales trends.
• One fund manager, past or present, you would love to have on your team: Sanjoy Bhattacharya.
• Beyond returns, one criterion you want investors to judge your AMC on: Pedigree.
• If not running an AMC, what would you be doing? Would go back to being a fund manager.

This article was originally published on October 22, 2025.