2026 Investment Outlook: Diversification and innovation key to success

Investor behavior remains the wildcard, with panelists criticizing the constant chase for past winners.

At the Moneycontrol Dezerv Wealth Summit in Mumbai, a powerhouse panel unpacked the mutual fund landscape for 2026, blending data on flows, behavioral pitfalls, and forward-thinking strategies.

Moderated amid buzzing conversations on India's evolving wealth ecosystem, panel members dissected how investors must adapt to shifting tides. With equity markets maturing and gold's surge rewriting rules, their insights offer a pragmatic roadmap for the year ahead.

Investor behavior remains the wildcard, with panelists criticizing the constant chase for past winners. Kalpen Parekh, MD & CEO, DSP Mutual Fund, drawing from decades in the industry, warned against mistiming entries: “Those who want to be genuine investors should acknowledge that it is not a straight line, you rather know when not to enter and don’t mis-time it.”

Swarup Mohanty, Vice Chairman & CEO of Mirae Asset Investment Managers India, expressed concern about the worsening trend of investors acting like fund managers, saying, "Unfortunately, I think it's even worse in 2025 than when we started our careers... People are becoming fund managers over fund managers."

Parekh cautions against endpoint bias, saying gold's 100 percent surge in a year doesn't justify conclusions about its future performance, given its long-term median returns are only 10 to 11 percent. He advises prudence when an asset class peaks, stating, "When some asset class runs ahead of its return, you have to flag off and bring prudence. The best time for prudence is at the tip of the market, not at the bottom" .

Sid Swaminathan, MD & CEO of Jio BlackRock Mutual Fund, stressed the importance of discipline in investing, recommending that portfolios focus on "core exposures" such as diversified equities rather than chasing short-term gains.

Also read | Treat your portfolio as a system, not a stock basket: Vaibhav Porwal, Deserv

Parekh highlights a significant shift in investment flows for 2025-26. Gold and silver investments surged, with flows increasing from less than Rs 5,000 crores to Rs 35,000 to 40,000 crores. In contrast, thematic funds experienced a decline, with flows dropping from Rs 1,35,000 crores to Rs 25,000 crores.

Parekh notes a shift towards balanced strategies, with multi-asset funds seeing Rs 35,000 crore in flows and flexi-cap funds growing 80% in flow. He advises to focus on core, flexible strategies and diversification through multi-asset funds.

Mohanty revealed deeper cultural truths: “An average Indian invests 30–32 percent of her money in gold. Only 10 percent of their money comes in equity.” To grow, the industry must bridge this gap with comfortable products.

Mohanty expects a significant shift in investment strategies for 2026, stating that traditional portfolio allocation rules may no longer apply. He notes that gold's strong performance challenges conventional wisdom, rendering the notion of gold as a hedge against equity obsolete.

Swaminathan emphasizes equities, particularly flexi-cap funds, as a core investment, while acknowledging gold's importance in uncertain times.

Parekh stresses personalized investing, illustrating with his own portfolio: "My son has 100 percent in equity. I have 65 percent in equity. Each person decides what is their appetite and what will help them stay invested for very long periods."

Swaminathan emphasizes building a comprehensive investment ecosystem, focusing on a range of offerings including core flexi-cap funds and satellite investments like international funds, made accessible through digital platforms.

Mohanty highlights the need for products catering to younger investors with higher risk appetite. He suggests that traditional flexi-cap funds may not be their core investment choice, requiring innovative offerings to attract this demographic.

Parekh advocates for disciplined hybrid funds combining India and global equities at sensible prices, offering a balanced investment approach.

Gift City is poised to become a global investment hub, with Parekh highlighting its potential. DSP's international fund launch showcases opportunities to access top global businesses at fair prices. However, challenges like 1.5 percent currency spreads and complex processes remain, expected to ease in months.

Mohanty deems international allocation "absolutely essential", anticipating Liberalised Remittance Scheme (LRS) growth. Swaminathan emphasizes digitization, citing Jio BlackRock's model that enables seamless, friction-free international investing.

As 2026 approaches, the strategy is straightforward: overcome biases, diversify, and innovate fearlessly. With gold and equities thriving, wise investment remains the key to success.