In an uncertain market where predicting winners is difficult, Vishal Jain, CEO of Zerodha Fund House, says low-cost index funds and ETFs should form the core of a long-term portfolio for broad exposure and simplicity.
Edited excerpts on a chat with Vishal Jain on strategy, investment themes, and asset allocation amid volatile markets.
Zerodha Mutual Fund is a relatively new entrant—how has the journey been so far amid volatile markets?
Vishal Jain:The investor response has been really encouraging. We now have 18 products across ETFs and Index Funds — covering equity, debt, and commodities — with over 11 lakh unique investors spread across 17,000 pin codes. With the foundational product suite now firmly in place, our focus shifts to the next phase: building a more sophisticated layer of products on top of these core building blocks.
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Zerodha MF focuses on passive and factor-based strategies—how do you see these strategies evolving in India?
Vishal Jain:Until now, we've largely focused on getting the basics right — building blocks across different asset classes and solutions. Factor investing is something that's been around globally for a long time, and it's only now starting to pick up in India. What's interesting about factor-based strategies is that they can potentially offer better risk-adjusted returns — and that's something we're actively researching right now.
What investment approach should mutual fund investors follow in the current phase of market volatility?Vishal Jain: If the last couple of years have taught us anything, it's that Asset Allocation is the way to go. As investors, we simply don't know which asset class will outperform at any given point — and that's precisely why having a well-diversified portfolio across all major asset classes is so important. It not only helps reduce volatility but also improves risk-adjusted returns over the long run.
What key risks should investors be mindful of in the current market setup?
Vishal Jain:Building on that point — one of the biggest risks investors face is when one asset class significantly underperforms another. That's where an asset allocation framework really earns its keep. It helps you stay prepared rather than scrambling when markets get rough. A good example of this is Gold. Historically, Gold and Equity have had a very low correlation — meaning when equities struggle, Gold often holds its ground. It's a simple but powerful example of why getting your asset allocation right can make a real difference to your overall portfolio.
With growing interest in index funds and ETFs, do you think active funds are losing relevance?
Vishal Jain:I think there will always be a place for both active and passive funds in India — at the end of the day, it comes down to what works best for each individual. That said, passive products have a lot going for them: they're simple to understand, transparent, cost-effective, and available across asset classes and fund structures — whether ETFs or Index Funds. For all these reasons, they're well-positioned to become a core part of every investor's portfolio.
What investment themes or sectors look promising over the next 12–18 months?
Vishal Jain:Honestly, that's a difficult question for anyone to answer with confidence. Rather than chasing themes or sectors, investors are better served by focusing on what they can control — building a well-diversified, long-term portfolio that's aligned with their risk tolerance, time horizon, and financial goals. If you're unsure where to start, working with a good advisor can make that process a lot easier.
As small and mid caps saw a jump in the monthly inflows in March. Should one allocate in these categories now?
Vishal Jain:The way I think about this is through the core-satellite approach. The bulk of your portfolio should sit in core assets — low-cost, diversified ETFs or Index Funds that give you broad exposure to the Indian economy. The satellite portion, which is typically smaller, can then be used for higher-risk segments like small and mid caps — assets that come with more volatility but also the potential for higher returns. How you split between core and satellite ultimately comes down to your own risk appetite.
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In the current market scenario, should one focus on gold and silver ETFs for investments? What allocation to make?
Vishal Jain:Markets are unpredictable — and that's precisely why trying to time any single asset class is rarely a winning strategy. The better approach is to build a well-diversified portfolio across asset classes, where gold and silver can absolutely play a role as part of your overall allocation. As for the right allocation, that's really personal — it depends on your risk profile, goals, and time horizon. A financial advisor can help you figure out what mix makes the most sense for you.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
