4 key insights for investors from HDFC Mutual Fund Yearbook 2026

Investing is one of the best ways to test your discipline, patience and resilience. Considering the sort of year Indians have experienced in 2025, with market volatility, portfolios in the red, and FII outflows, it’s essential to seek grounding by reflecting on lessons that can help bring about a change in mindset. 

While the outlook for 2026 seems positive, at least currently, rising geopolitical tensions, gold and silver at record highs and an unstable global economy make it even more important for investors to learn how to keep swimming. 

Let’s discuss some investing insights for investors from the HDFC Mutual Fund Yearbook 2026. These lessons might seem obvious and something you’ve always known, but they’re also the things that only some investors practise consistently to achieve success. 

More importantly, awareness doesn’t always bring action. So maybe this time, you not only take these lessons home but also use them for your portfolio to see what actually changes.

Diversify like your future depends on it

Diversification is probably one of the most commonly discussed investing lessons taught to investors, even beginners, but only some can understand the art of diversifying. 

You may think you have a diverse portfolio, but in reality, you have just invested in different mutual funds that invest in more or less the same stocks. For example, if you invest in two large-cap funds offered by different AMCs, that’s not diversification; you’re practically investing in the same (almost) stocks, just through other funds. 

Diversifying your portfolio means investing in different asset classes, different industries, different risk profiles and even in different locations.    One key way to diversify your portfolio is by investing in hybrid funds. These funds invest in both equity and debt instruments, helping investors balance returns and risk. They’re suitable for investors seeking moderate returns with lower volatility than funds that only invest in equity. 

“First-time investors can consider investing in hybrid funds to reduce portfolio volatility and endeavor to benefit from the goodness of all the 3 major asset classes – Equity, Debt and Gold,” according to the yearbook, which also shared data on pure equity and pure debt portfolios vs diversified portfolios. 

As per the data, a pure equity portfolio generates 14.1% returns but gives 18.5% volatility. On the other hand, a portfolio with 80% equity, 10% debt and 10% gold gives 14.2% returns and 14.8% volatility. 

Diversify even within equities

Diversification across asset classes isn’t enough: If you’re investing heavily in equity, you may also consider diversifying within equity investments, like investing in various market capitalisations, sectors and styles. 

• Market cap: Large cap, Mid cap and Small cap companies
• Sector and themes
• Style diversification: Value/growth

The HDFC MF yearbook, citing Bloomberg data, shared the winners across market caps, sectors and styles to illustrate the lesson. NIFTY 100 TRI has been ranked 1 among the market caps 6 times in 21 years (FY2006 to FY2026 YTD, while NIFTY Auto TRI has been ranked 1 within the sectors/themes 4 times in 19 years (FY2011 to FY2026 YTD). 

Play the long game

Patience will take you places that ‘timing the market’ usually won’t. In investing, experts often advise beginners to focus on long-term investing from the very start.

The true potential of compounding is visible only in the long-term: As investment horizon increases, the probability of loss decreases because markets tend to deliver returns in line with the profit growth of companies, which is a function of underlying economic growth, according to the yearbook. 

For instance, the probability of incurring losses from investing in the BSE Sensex is 26% in 1 year, but is 1% in 10 years and 0% in 15 years or more, as per Reuters data cited in the yearbook. This means that if you think long-term and invest accordingly, your chances of incurring losses are minimal. 

Systematic Investment Plan

SIP has become a buzzword in the investing market in India. Beginners are told about SIPs even before they start investing, and not without reason, but because SIPs are by far one of the most effective ways to encourage disciplined investing and reduce market risk. 

“SIPs average out the cost of investments in the long term, making investors stay away from external noise,” the yearbook says. 

An investor who started SIPs in January 2019 through SIPs in HDFC Small Cap Fund, and invested a total of ₹8.4 lakh through monthly SIPs of ₹10,000, will have investments worth ₹18.2 lakh as of December 31, 2025. This marks a profit of ₹9.8 lakh and a CAGR of 21.8%, even with market corrections, according to the yearbook. 

SIPs can be a great tool for managing emotions: By choosing SIPs, you can skip the decision-making process of when and when not to invest in the market, simply reducing the impact of market volatility by averaging market risk over time.