As equity market volatility peaks amid rising geopolitical uncertainty and weakening macroeconomic indicators, retail mutual fund investors are once again confronting familiar questions around risk, returns and long-term wealth creation. Dipak Mondal spoke with Swarup Mohanty, chief executive officer of Mirae Asset Mutual Fund, on market conditions, investor behaviour, AI, gold and the evolving structure of India’s capital markets. Edited excerpts:
Given the recent volatility, does investing in large caps make more sense now?
Investing in large-caps always makes sense. In overheated markets, some investors may prefer passive strategies or simply buying the Nifty 50, but nobody disputes the importance of owning quality large-cap businesses.
After the recent correction, several strong companies are available at attractive valuations. Large-caps should continue to form the core of most portfolios.
India is entering a very interesting phase. Earlier, India became a $4 trillion economy while per capita income was still relatively low. Now the real story will unfold as per capita income rises from roughly $2,000 toward $3,000 and beyond. That transition changes consumption patterns, travel, spending behaviour and the broader economy. The beneficiaries of that growth will likely include several large, dominant companies.
Some fund managers have suggested investors should slow SIPs into small-cap funds. Do you agree?
No, we are not from that camp. Over the last few years, many new-age businesses have listed in the small-cap space, including companies in energy, asset management, hospitals, capital markets and consumer sectors.
Earlier, concerns around corporate governance were more common among smaller companies. But today, a generational shift is taking place. Many businesses that were once run conservatively by founders are now being managed by second-generation entrepreneurs who understand the value of public markets and corporate branding. As a result, several quality businesses are entering the listed universe.
If 250-300 companies are listing every year, investors only need to identify 10–20 good businesses over time to create wealth.
That said, investors should still follow asset allocation principles and understand their own risk profile. But many people discover their true risk appetite only after market corrections.
There is a perception that mutual funds don’t generate good returns and that wealth is being transferred from the middle class to the rich through expensive IPOs and private equity exits. What’s your take?
At the top level, it is a fact that when foreign institutional investors (FIIs) sell and Indian investors buy, there is a shift in ownership taking place in the market. Both are important. I do not belong to the camp that believes India can do it alone. Institutional ownership helps strengthen corporate governance because global investors typically invest only when companies meet certain standards of conduct and disclosure.
At the same time, Indian ownership of Indian markets is increasing, and that is a positive structural shift. Over time, investors realise that markets move through cycles and that wealth creation comes from staying invested through those phases.
What is the response to global investing themes and overseas diversification?
Unfortunately, mutual funds currently face regulatory limits on overseas investing. The industry-level cap imposed by the RBI has already been exhausted, so access is very limited.
But philosophically, global diversification makes complete sense.
India represents only around 3–3.5% of global equity markets. Many world-leading businesses and sectors are still not available in India at scale. Currency diversification also matters.
The rupee historically depreciates gradually over time, and owning assets denominated in other currencies can provide balance.
Investors can still explore overseas opportunities through routes such as GIFT City products, though retail participation remains limited.
Are you concerned about India being seen as a “non-AI” market compared to global markets?
At some stage, India may be perceived globally as a “non-AI” market relative to the US and certain other economies. Globally, capital is currently flowing aggressively toward AI-led companies.
One company in the AI space today is larger than the entire Indian market capitalisation. That does not mean India lacks technology capability. We are simply behind in the AI race at this moment.
How is AI changing fund management?
AI’s impact is still evolving, but the transformation has already begun. Traditional forms of analysis are becoming less valuable because information is now widely accessible. The advantage increasingly lies in how efficiently and intelligently you process that information.
Gold has become a major investment theme again. How do you view it?
Gold is deeply embedded in Indian financial behaviour. There is probably no Indian family that does not buy gold.
What is interesting is that Indians buy gold systematically and emotionally, regardless of price. People buy during festivals, weddings and family occasions without worrying about short-term valuations.
In many ways, this is one of the most evolved investment behaviours in the world — buying a quality asset consistently over generations.
My request to investors is simple: apply the same long-term mindset to equities as you do to gold.
In gold investing, people do not panic if prices stagnate for a few years. But in equities, even short-term volatility causes anxiety. Long-term wealth creation requires patience in both asset classes.