Fund manager insights: Rohit Tandon of Kotak MF on resilient portfolios and long‑term investing

In today’s fast-moving equity markets, investors face the challenge of balancing growth opportunities with volatility, while trying to make their money work harder over the long term. Understanding market cycles, sector trends, and disciplined investment strategies has become more important than ever.

In an exclusive interview with Upstox, Rohit Tandon, Senior Fund Manager at Kotak Mutual Fund, shares his insights on building resilient portfolios, navigating market ups and downs, and making informed decisions for long-term wealth creation.

Q. How do you differentiate the Active Momentum Fund and the Business Cycle Fund in terms of risk, return, and market conditions?

Both Momentum and Business Cycle funds are classified as "Thematic/Strategy" in the Indian mutual fund market. They are intended to outperform a standard index (such as the Nifty 50) by being more aggressive; yet, they employ two distinct "intellectual engines."

The Kotak Active Momentum Fund follows a rigorously tested, factor-driven investment model. It selects around 40–50 companies that demonstrate strong earnings momentum—firms showing accelerating profit growth, upward earnings revisions, and consistent analyst upgrades.

The fund invests largely in mid and large-cap companies, and while it remains diversified across sectors, the sector weights arise from the momentum model rather than discretionary top-down calls.

In contrast, the Kotak Business Cycle Fund is driven by a macroeconomic perspective. It analyses where the economy stands within the business cycle and identifies sectors likely to outperform over the next one to three years.

Once sectors are selected, the fund uses a bottom-up approach to pick fundamentally sound companies with strong financials and growth potential.

Both funds carry above-average volatility, consistent with their equity-focused mandates.

Q. For a long-term investor, which fund would you consider more suitable for wealth creation versus capital preservation?

Both strategies are designed for long-term wealth creation rather than capital preservation. Over a complete market cycle, a disciplined earnings momentum strategy has the potential to deliver superior compounding thanks to its ability to consistently identify companies with strong earnings trajectories. However, this comes with higher volatility and the need for patience during occasional periods of underperformance.

Q. For someone starting their first SIP, which fund would you recommend and why?

First-time SIP investors generally invest in diversified funds. However, those willing to understand the underlying concepts may consider these strategies. A helpful framework for beginners includes:

Q. Given current market conditions, do you see more opportunities in large-cap stability or cyclical/business cycle funds?

As of January 2026, cyclical sectors such as automobiles, banking, and metals are experiencing strong tailwinds. Business Cycle Funds are well-positioned to capture these opportunities. Large-cap funds offer stability and resilience but may lag during sharp growth phases. A balanced approach, maintaining a large-cap core while adding tactical exposure to cyclicals, provides a strong blend of stability and growth.

Q. What portion of a personal finance portfolio would you suggest allocating to equity funds versus hybrid/flexible funds like the Balanced Advantage Fund?

Balanced Advantage Funds adjust their equity and debt exposure dynamically based on market conditions. They aim to buy equity when valuations are attractive and reduce exposure when markets become expensive, all while maintaining equity taxation benefits if the equity allocation remains above 65%.

This approach provides smoother returns and reduced downside risk.

Moderate investors may consider 60% equity and 40% Balanced Advantage Fund split. Aggressive investors could go as much as 80% equity exposure, while conservative investors might prefer 30% equity exposure, with the balance allocated to hybrid funds.

Q. Are there tax or liquidity considerations investors should be aware of when investing in these funds?

Equity-oriented funds, including Momentum and Business Cycle Funds, are subject to 12.5% long-term capital gains tax on gains above ₹1.25 lakh and 20% on short-term gains.

Balanced Advantage Funds also qualify for equity taxation if equity exposure remains above 65%.

All these funds offer T+2 liquidity and typically have minimal or no exit loads after the first year.

Q. For retail investors, how should one track fund performance without getting overwhelmed by market noise?

Investors can easily become overwhelmed by daily market movements. To track performance effectively:

• Set clear expectations based on the fund’s mandate.

• Review performance annually or semi-annually.

• Avoid daily/weekly NAV tracking.

• Compare performance against relevant benchmarks and peer groups rather than in isolation.

What mistakes do you commonly see retail investors make when investing in sectoral, momentum, or large-cap funds, and how can they avoid them?

Frequent switching increases costs and taxes. I advise investors to stay focused on long-term goals, maintain diversification, and ensure the fund follows its mandate, which can help avoid these pitfalls.

Q. How often should an investor review or rebalance their portfolio when it includes these types of funds?

A standard annual review is sufficient for most investors. Those with thematic or high-volatility funds may opt for quarterly reviews. Rebalancing should ideally be gradual, using SIP adjustments or incremental investments.

Major life events, such as a career change, marriage, or large financial commitment, or extreme market movements, should prompt an additional review.