Consider these two contrasting investor statements we often hear:
“I am nervous about markets, so I’m keeping all my money in bank accounts / Fixed Deposits.”
“Equity markets have done really great – I should invest all my money in equities.”
Both of these statements reflect common investor sentiments, driven more by emotion than disciplined investment strategy. Holding large amounts of cash in bank accounts or Fixed Deposits may indicate fear, while maintaining higher than desired exposure to equities could signal overconfidence. These emotions are not conducive to a long-term investment strategy designed to withstand market threats, bubbles, and volatility.
Constructing a long-term investment strategy can be compared to embarking on a sailing voyage. Imagine owning two boats—a rowboat with sturdy oars and a sailboat captained by an expert sailor.
On a breezy day at a lake where the wind blows steadily, the sailboat is the obvious choice. It allows you to harness the wind’s natural power and glide effortlessly across the water. But on a calm lake with no wind, the sail boat would leave you stranded. In such a situation, the rowboat becomes your ideal choice, allowing you to navigate with your own strength.
Markets are no different. Sometimes conditions are supportive (wind) and a buy and hold strategy may work just like sailing. At other times when market turns volatile, that’s when rowing – making tactical adjustments keeps you moving ahead while reducing the impact of volatility.
In investing, sailing (buy and hold approach) represents a strategy that relies more on discipline and patience than constant intervention. Funds that follow a philosophy typically maintain allocations and avoid frequent shifts, aiming to capture the long-term benefits of equity markets but with may be higher volatility.
Rowing (tactical approach) symbolizes adaptability. To make progress, you must row – just as fund managers may alter portfolio to respond to market valuations, macroeconomic changes, or investor sentiment. Funds like Balanced Advantage Funds and Multi-Asset Funds usually adopt this rowing approach. They use model-driven frameworks to manage volatility, dynamically adjust equity, debt, commodities exposure to reduce risk. When valuations are stretched, these funds aim to trimming equity allocation or when valuations are attractive, they aim to increase equity exposure. This flexibility helps investors stay invested through the ups and downs of the market by reducing volatility.
Investors seeking lower volatility with possibility of lower return, may consider rowing. By adjusting allocations, fund managers may ensure that investors don’t abandon the voyage in rough waters or sit idle when the wind dies down. Instead, the Fund manager keeps moving the portfolio steadily, reducing the impact of volatility while still capturing opportunities for growth by rebalancing the portfolio.
Tactical asset allocation is not about chasing markets or reacting impulsively—it is about staying invested with lower volatility.
In investing, you don’t control the wind, but with tactical allocation, you always control the oar. Stay the course and row with discipline.
Disclaimer: The views expressed by Mr. Rajiv Maniar, Head – Sales & Distribution of HDFC Asset Management Company Limited (HDFC AMC) are as of October 7, 2025. The views are based on internal data, publicly available information and other sources believed to be reliable. Any calculations made are approximations. The statements contained herein are based on our current views and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Stocks/Sectors referred above are illustrative and not recommended by HDFC Mutual Fund (“the Fund”)/ HDFC AMC. The Schemes of the Fund may or may not have any present or future positions in these sectors. The Fund/ HDFCAMC is not guaranteeing any returns on investments made in the Scheme(s). Past performance may or may not be sustained in future and is not a guarantee of any future returns. Readers before acting on any information herein should make his/her/their own investigation and seek appropriate professional advice and shall alone be fully responsible / liable for any decision taken on the basis of information contained herein.
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(Author: Mr. Rajiv Maniar, Executive Vice President and Head – Sales & Distribution, HDFC Asset Management Company Limited
