MC EXCLUSIVE We bring a private-equity mindset to flexi-cap investing, says Madhu Lunawat of The Wealth Company

Madhu Lunawat, MD and CEO of The Wealth Company

Madhu Lunawat, managing director and CEO of The Wealth Company, is the first woman in India to launch a mutual fund. With years of experience managing more than a billion dollars in alternative investment funds (AIFs), she brings a private equity-style lens to retail investing through Wealth Company’s debut scheme — a flexi-cap fund.

In an interview to Moneycontrol, Lunawat shares why she chose flexi-cap as her first offering, what makes her approach different from traditional mutual funds, her views on passive investing and why empowering women through financial inclusion remains close to her heart. Here are the edited excerpts of the interview:

Your first scheme is a flexi-cap fund. Why did you not go for a large, mid or small-cap fund?

You’re right, we could have launched a large-cap or a small-cap fund but markets move in cycles and that’s why we felt flexi-cap is the right place to start. For example, between 2004 and 2007, large-caps drove performance, supported by economic growth. But in the 2008–2010 recovery, mid-caps led the bounce-back. Flexi-cap gives us that flexibility to shift between categories, depending on the cycle. Even today, we continue to see those shifts, so, we believe this is the most suitable fund to launch first.

There are already several flexi-cap funds in the market. How is your fund different?

Before starting this fund house, I was managing alternative investment funds (AIFs) with over a billion dollars under management. We invested in both listed and unlisted companies; that experience shaped our philosophy  — a private equity-style approach with very deep research.

We focus on understanding a company’s DNA: promoter quality, governance, sustainability, and long-term growth potential. It’s not about having control over companies, it’s about discipline and understanding what makes a business successful.

So, your research process is more like private equity than traditional mutual funds?

Yes. The first level of research is done using data and technology but that’s just the start. After that, we spend a lot of time on the ground  meeting management teams, suppliers, distributors, and even customers. This gives us insights that pure quantitative tools cannot capture.

Then we look at the behavioural aspects: how management reacts under pressure, how consistent they are and how they conduct themselves. All of this becomes part of our decision-making.

That’s why we believe in conviction-driven investing. We prefer fewer but stronger ideas. Instead of holding 70–80 names, our portfolio will typically have around 40–45 carefully chosen stocks.

Given the volatility, what advice would you give to investors?

Volatility will always be there. It was there in the past, it is there today, and it will be there tomorrow. But India’s long-term story remains intact. My advice is to focus on your long-term goals and not get distracted by daily market swings. Compounding works over time, not week to week, that is why investors should stay disciplined and let their advisers guide them with proper asset allocation.

Which sectors look attractive to you right now?

We see opportunities in consumption and manufacturing. Consumption is a structural story for India — rising incomes and a young population will keep driving demand. Manufacturing is also becoming stronger, supported by government policies and global supply-chain shifts. These two areas look very promising to us at the moment.

Asset allocation is often called the secret sauce of wealth creation. How can investors build a balanced portfolio?

Keep it simple. You don’t need too many funds —  six to seven schemes are enough. If you are young and have a long horizon, you can invest more in equities. If not, balance it between debt and equity  but always link it to your personal goals and not to what someone else is doing.

You’ve said the fund house will focus on a distribution-led ecosystem. What does that mean?

Absolutely. In India, we have nearly two lakh distributors. They are the ones on the ground, helping families plan their financial future. If you don’t have an adviser, you often don’t know which fund is right for you.

We want to build our ecosystem around them because they play a critical role in investor awareness and financial inclusion. Our aim is to support them with better training, simpler communication and the right tools so they can explain products in a language investors understand.

Of course, direct plans will also be available for those who prefer that route.

You’ve also been vocal about women empowerment. How does that reflect in your work?

This is very close to my heart. We are working to empower women at multiple levels — whether they are distributors, employees in our organisation, or entrepreneurs in tier-2 and 3 cities. We are building programmes that combine skill development with employment opportunities such as training women to become financial advisers or distributors. This not only gives them income but also spreads financial awareness in smaller cities. For many women, financial independence is the first step towards empowerment, and we want to support them in that journey.