As India stands at a demographic crossroad, with a rapidly ageing population with increased longevity, retirement planning is no longer optional, but a necessity. In a candid conversation with Nidhi Sinha, Editor, Outlook Money, Navneet Munot, MD and CEO, HDFC Asset Management, explained why disciplined investing, thoughtful asset allocation, and multi-asset funds may hold the key to navigating volatility and securing long-term financial independence. From market swings and gold cycles to systematic investment plans (SIPs) and behavioural biases, Munot outlined how investors of any age can build stability without sacrificing growth.
Let me begin with multi-asset funds. As the name suggests, they invest across equity, gold, and so on. But how are they different from other hybrid funds, such as balanced advantage or aggressive hybrid funds?
India takes pride in being one of the youngest countries demographically. The median age is around 29. But over the next couple of decades, we will also have the highest number of retirees and elderly people. Historically, because of our social structure, people didn’t prepare much for retirement — there was a belief that the next generation would take care of you.
If you look at China, when its population was growing in the 70s and 80s, it introduced the one-child policy. Now they face what is called the four-to-one problem — one working individual supporting two parents and four grandparents. The country became rich, but people may not necessarily be wealthy individually. So as India grows prosperous, ensuring every household benefits and enjoys a happy retirement is important.
Coming to multi-asset funds, as the name suggests, they invest across asset classes. Minimum 10 per cent has to be in equity, minimum 10 per cent in fixed income, and minimum 10 per cent in commodities like gold or silver. The remaining allocation depends on the fund manager’s view or asset allocation framework.
In one single fund, you get exposure to three asset classes. Equity provides growth, but comes with volatility. Fixed income provides income and stability. Gold acts as a shock absorber — during geopolitical stress, inflation, or market downturns, gold typically performs well.
Hybrid equity funds generally allocate across two asset classes — roughly two-thirds equity and one-third fixed income. Balanced advantage funds dynamically allocate between equity and fixed income. Multi-asset funds, however, invest across three asset classes and offer automatic rebalancing. It also tends to be more tax-efficient compared to switching between individual funds yourself.
A lot of young investors are present here. Since multi-asset funds involve professional asset allocation, do you think they are suitable for younger investors?
Of course, they suit all investors — young, middle-aged, or those nearing retirement.
People often say the younger generation believes in “zindagi na milegi dobara,” that they don’t care about the future. I have a very different view. Industry data shows more young investors entering markets today than 10 years ago. They are curious, experimental, and more involved.
But the ultimate formula for wealth creation remains simple: sound investment plus time plus patience.
Multi-asset funds provide portfolio stability through fixed income, growth through equity, and protection through gold. That works well even for younger investors.
Young investors are curious, but curiosity can sometimes lead to excessive trading — crypto, derivatives, gaming apps. Experts have warned about risks. How should they approach equity markets?
Younger investors have a higher risk appetite and optimism about their future and the country’s future. That’s why they experiment — crypto, futures and options (F&O), trading apps.
But data shows that around 93 per cent of people lose money in derivatives. Crypto has seen huge volatility — down roughly 40 per cent from peaks. Even initial public offerings (IPOs) were once jokingly called “instant profit opportunities,” but investing doesn’t work like that.
Investing is serious business. Think long term, stay disciplined, invest regularly, avoid peer pressure, and focus on your goals.
Many investors don’t fully understand the risk-return trade-off. Could you explain that?
Higher returns generally come with higher risk. Equity has delivered strong returns historically — The Sensex moved from 100 in 1979 to around 83,000 now. But there have been sharp drawdowns. For example, during Covid in March 2020, Nifty fell from 12,000 to about 7,700.
If you stayed invested, you more than doubled your money afterward. The risk in equity is volatility. But not investing carries another risk — failing to beat inflation and losing purchasing power.
Fixed income offers stability, but limited upside. Gold doesn’t generate earnings like equity or interest like bonds. Its price depends on what the next buyer pays. But it acts as a hedge against geopolitical risks, inflation, or currency issues.
Diversification is the only free lunch in finance. A diversified portfolio across asset classes gives you a balanced risk-return profile.
Gold and silver have rallied recently. Many investors are asking whether this is the right time to buy. Is chasing recent performance-wise?
Indians have invested in gold for centuries, often culturally. Household balance sheets still show about 50 per cent in real estate, 15 per cent gold, 15 per cent deposits, and equity only around 6 per cent.
Gold should be viewed like insurance. You don’t buy car insurance hoping to make money. Similarly, ideally, gold shouldn’t need to deliver high returns — it does well when there is uncertainty.
Prices move in cycles. Gold prices fell for nearly 20 years between 1982 and 2002. Silver took decades to cross earlier peaks. So don’t chase what has recently performed well. Maintain diversification and rebalance regularly.
Many post-Covid investors haven’t seen major market crashes. Now markets are volatile. What should their approach be?
I must compliment Indian investors for their resilience. Monthly SIP inflows have grown from about Rs 3,500 crore in 2016 to around Rs 31,000 crore recently. During this period, we saw mid-cap corrections, Covid crash, geopolitical volatility, and recent market fluctuations. Yet SIP flows kept rising.
Investors increasingly understand that volatility can work in their favour — during market falls, SIPs buy more units. Staying disciplined is key.
Can mutual funds help build sustainable retirement portfolios?
Absolutely. Mutual funds offer solutions for every horizon — liquid funds for short-term parking, debt funds for medium term, equity funds for long-term growth, and hybrid funds depending on risk appetite.
You can construct a retirement portfolio yourself with an advisor's help or invest in retirement-oriented mutual funds designed specifically for that purpose. These funds psychologically help investors stay committed to long-term goals.
Are retirement funds different from regular equity funds?
Investment processes are similar. They invest in equity and fixed income using standard investment philosophies. The difference is psychological and goal-oriented — you invest specifically for retirement, so investors tend to stay invested longer.
Asset allocation keeps coming up, and multi-asset funds simplify that?
Exactly. With multi-asset funds, one investment gives exposure to equity, fixed income, and gold, with automatic rebalancing. Otherwise, investors have to monitor and rebalance themselves.
The “40 After 40” theme suggests that if you’re already 40, retirement planning becomes urgent. Is 40 the right warning bell?
Earlier is always better. Warren Buffett said he started investing at 11 and wished he had started earlier. In the long run, your wealth depends less on how much you earn and more on how much your money earns. Time and compounding matter enormously.
Starting at 40 isn’t too late — you still have productive earning years. But life expectancy is rising. At independence, life expectancy in India was about 36–37 years. Now it’s late 70s and rising. Longer retirement periods mean greater financial needs. Also, remember three inflations: price inflation, lifestyle inflation, and longevity inflation. All three increase financial needs.
Your final advice to investors?
Historically, we assumed the next generation would take care of us. Social structures are changing. Fewer children, nuclear families — people must prepare for their own retirement. Start on time, invest with discipline, ignore noise and peer pressure, and avoid recency bias and bandwagon effects. Focus on your own goals. Have a good advisor or distributor. Investing is not just about knowing more; it’s about behaving correctly. Good guidance helps achieve life goals.
And one positive trend — more women are getting involved in finance. Historically, finances were left to husbands or fathers. That’s changing. Women tend to think longer term and bring patience and resilience. I believe India’s financial future is in good hands.
