'We assign relatively higher weight to momentum'

Summary: Corrections are when real wealth is built, not bull markets. Bhavesh Jain has managed hybrid funds through every volatile phase since 2008 without a rating below 4 stars. His framework for why is worth understanding.

Summary: Corrections are when real wealth is built, not bull markets. Bhavesh Jain has managed hybrid funds through every volatile phase since 2008 without a rating below 4 stars. His framework for why is worth understanding. At a time when markets are swinging between geopolitical shocks and compressed returns, Bhavesh Jain is focused on consistency rather than chasing standout years. The Co-head of factor investing at Edelweiss Mutual Fund, who has over 16 years of experience and oversees hybrid strategies such as the Balanced Advantage and Arbitrage funds, believes disciplined, risk-aware investing delivers better outcomes than sporadic outperformance. His approach combines conservative portfolio construction with a structured, multi-factor framework that adapts across market cycles. In this conversation, Jain explains why staying in the top half of the performance table matters more than topping it, how factor investing helps navigate shifting market regimes and why corrections are the most powerful phases for long-term investors. The record of never receiving a rating below 4 stars is genuinely rare. What sits at the core of your stock selection framework? Winning the Morningstar Best Manager Award consecutively, and being the first AMC outside the top 10 to do so. Several layers drive this. We maintain a conservative equity portfolio in mandates like the BAF (balanced advantage fund) or aggressive hybrid fund; there’s a consistent large-cap bias. On fixed income, both funds carry nearly 100 per cent allocation to AAA-rated securities, G-secs and T-bills. No credit risk, no duration stretch beyond 3-5 years. We also avoid large overweight or underweight sector bets, preferring granular deviations. We’re style-agnostic and benchmark-aware. Within the AMC, we maintain two distinct equity teams—Trideep Bhattacharya leads fundamental long-only strategies (mid, small, flexi, focused), while Bharat Lahoti and I co-head hybrid funds under the factor investing team. The Sensex’s five-year return has compressed to around 8 per cent per annum. Are you in capital preservation mode or hunting for opportunities? The last two years have been largely flat, compressing the three-, five- and seven-year return optics. Valuations were stretched coming out of the 2023-24 bull run, and global events—Russia-Ukraine, US-China tensions, Middle East escalation—added to uncertainty. That said, meaningful correction has already happened. Historically, corrections rarely stretch beyond 18-24 months. We’ve had close to 24 months of negligible returns, making valuations far more reasonable—not cheap, but comfortable. The near-term, say two to three months, remains difficult to call. Geopolitics is unpredictable, and markets are swinging 5-10 per cent on news flows. But from a three- to five-year perspective, risk-reward is clearly improving. Recoveries from global-driven corrections tend to be sharp. In 2008, markets fell around 50 per cent and rose around 75 per cent in 2009. After the 25 per cent decline in 2011, markets gained around 27 per cent in 2012. Once geopolitical tensions ease, a similar response is plausible. We’ve been cautious for 18 months due to stret