As markets stabilise, how should investors allocate? UTI AMC’s Vishal Chopda explains in 5 points

Vishal Chopda, Senior Vice President – Equity at UTI AMC, outlines a measured approach to portfolio allocation.

Valuations remain elevated; avoid incremental risk

Chopda said Indian equities continue to trade in expensive territory, even as market conditions improve. He cautioned against increasing risk exposure at this stage, noting that optimism following stability phases can lead to premature allocation decisions.

Large caps offer relative stability in uncertain phases

Within equities, large-cap stocks provide relatively more comfort due to their resilience during volatile or uncertain macro conditions. Historical trends suggest they tend to hold up better during turbulence compared to broader markets.

ALSO READ | This mutual fund has turned ₹10,000 monthly SIP into nearly ₹87 lakh in 38 years

Diversified and dynamic strategies may help manage volatility

He pointed to multi-asset allocation and balanced advantage funds as suitable in the current environment. These strategies dynamically shift between equity, debt and other assets, helping manage downside risks while maintaining participation in growth opportunities. Such funds are designed to deliver relatively better risk-adjusted returns across market cycles.

Mid- and small-caps: stay invested, but be selective and staggered

While mid- and small-cap segments remain important for long-term return enhancement, Chopda flagged that they are more vulnerable to sharp valuation swings in weaker macro conditions.

• SIPs can help investors continue participation in a staggered manner
• Lump sum investments may carry higher risk at current valuations
• A selective approach—focusing on funds investing in quality businesses with strong capital allocation and reasonable valuations—is key

He also noted that strategies blending growth and value styles may be more suited in the current phase.

Core–satellite approach and goal-based investing remain key

Chopda recommended anchoring portfolios with core allocations in relatively stable categories such as large-cap, flexi-cap, or multi-cap funds, which can benefit from long-term compounding.

Satellite allocations, including mid-cap exposure, may require more active monitoring and periodic rebalancing based on market conditions and investor risk appetite.

He emphasised that investors should align portfolios with financial goals and asset allocation plans, rather than reacting to short-term market movements.

Overly conservative positioning, he added, could also limit long-term wealth creation.

ALSO READ | New rules on Fixed Medical Allowance for NPS pensioners: How payments will work