Introduction: The Market That Rewards Discipline, Not Drama
When I meet my clients — from senior executives in Gurugram to newly married couples in Bengaluru — one question always pops up:
“Taresh, the markets are at record highs. Should I still invest?”
My answer rarely changes: Markets reward the disciplined, not the dramatic.
October 2025 has reminded us of this truth once again. Beneath the noise of headlines and index milestones, there’s a quiet revolution happening — one that every mutual-fund investor needs to understand.
This is a story about patience, process, and how smart investors are letting time and discipline, not prediction, create wealth.
1. Margin Expansion — The Hidden Engine of Fund Performance
A few months ago, a client of mine, Neha — a mid-career professional in her 40s — walked into my office with a notebook full of fund statements.
Her question was simple: “Why is one of my equity funds compounding faster than the rest, even though I invested equal amounts?”
When we dug deeper, the reason was clear — margin expansion.
When companies make more profit from every rupee of sales, their earnings momentum accelerates. Funds that identify such companies early create an outsized compounding effect.
This “silent expansion” is what separates average mutual funds from extraordinary ones.
The best fund managers I’ve interacted with don’t chase every growth story — they chase quality of growth. They study which businesses are improving efficiency, strengthening pricing power, and converting top-line growth into long-term shareholder wealth.
So next time your SIP grows faster than you expected — remember, it’s not magic. It’s margins.
2. Passive Investing vs Guided Investing — The Great Debate
For years, investors have been told that passive investing is the easiest road to wealth — “Just set up your SIP, sit back, and let the index work for you.”
And yes, for many investors, that’s perfectly true. Automating investments through passive funds keeps costs low, removes emotions, and ensures long-term discipline. I often recommend index SIPs to beginners who are just starting their journey.
But here’s the other side of the debate — and it’s equally important.
If you have an able and qualified CFP® or mutual-fund distributor guiding you, it absolutely makes sense to invest under their professional supervision.
Why? Because a qualified planner doesn’t just look at returns — he looks at you.
He studies your risk profile, time horizon, and life goals before recommending the right mix of funds.
He might suggest active funds when he can personally monitor them, review their portfolios quarterly, and switch when market or fund-manager dynamics change.
That’s something a purely passive strategy cannot do for you.
In short, passive investing works when you have time; active advice works when you value time.
When you combine automation with expert oversight, you get the best of both worlds — discipline and direction.
3. Institutional Rebalancing — What Mutual Funds Are Quietly Doing
Over the past quarter, fund houses have been reshuffling portfolios in a subtle but strategic way:
• Reducing exposure to overheated large-caps, especially in technology and banking.
• Increasing allocations to mid-caps and small-caps — sectors like manufacturing, building materials, and specialty chemicals.
• Focusing on capital efficiency, not size alone.
This silent shift is what I call the Institutional Compass.
When mutual funds rotate sectors, they signal where the next wave of compounding might come from.
Your SIPs, if diversified, automatically participate in these rotations — you don’t need to guess.
As I remind my clients: Let the fund managers sweat over sectors; your job is to stay consistent.
4. Small-Cap Turbulence — The Storm Before the Sunrise
In my early days as a planner, I met a client who panicked every time his small-cap fund dropped 10 per cent. One day, I told him gently:
“You don’t plant a mango tree and dig it up each week to check if it’s growing.”
Small-caps behave the same way.
Yes, they’re volatile. Yes, corrections hurt. But if history has taught us anything, it’s this: volatility today often precedes value tomorrow.
In 2025, small-cap indices have swung sharply — but this is also where India’s entrepreneurial growth is taking root: defence, engineering, renewables, logistics.
Mutual funds that stay disciplined and continue investing through volatility often emerge stronger when the dust settles.
5. Valuations Today — Where We Stand (With Facts, Not Fear)
Let’s address the big question — Are the markets overvalued?
Based on verified data from multiple reliable sources — Economic Times, Trendlyne, and Screener.in — the Sensex P/E ratio currently ranges between 22.5× and 23.5×.
That’s slightly above its long-term average, but far from bubble territory.
Here’s how I interpret it:
• Below 20× P/E: Markets are cheap — increase SIPs.
• 20–23× P/E: Fair to moderately overvalued — continue SIPs normally.
• Above 25× P/E: Elevated — be disciplined with asset allocation.
So at ≈ 23×, the market isn’t screaming danger; it’s whispering caution.
For your mutual funds, this means:
→ Stay invested, don’t rush lump sums, and stagger new entries through SIPs or STPs.
Wealth creation is not about timing the market — it’s about time in the market.
6. Sectoral Signals — Where the Next Decade May Compound
Infrastructure & Capital Goods – The government’s massive infrastructure pipeline continues to fuel order books. Cement, engineering, and logistics are the new compounding engines.
Banking & Financial Services – Private banks and select NBFCs with strong ROE remain the core of every diversified portfolio.
Energy & Renewables – India’s clean-energy transition has shifted from policy to profitability. Funds positioned here could see decade-long growth.
Technology & Digital Infrastructure – AI, SaaS, and global outsourcing are redefining export revenues. Tech funds remain crucial for diversification.
7. Price-to-Book — The Forgotten Compass
In three decades of financial planning, I’ve seen investors obsess over P/E ratios while ignoring the P/B (Price-to-Book) ratio — the quieter, sturdier compass of valuation.
P/B tells you how much investors pay for a company’s real worth — its net assets.
For instance, a company with 15 per cent ROE usually justifies a P/B around 3×.
If ROE rises to 25 per cent, P/B can soar to 5–6×.
Fund managers who anchor valuations to P/B rather than hype are the ones who quietly deliver consistency year after year.
8. The IPO Buzz — Why Patience Beats Popularity
Every month, someone asks me whether to invest in a hot new IPO. My honest answer?
“Let the excitement cool; let the balance sheet speak.”
IPOs enter mutual-fund portfolios only after valuations normalize and fundamentals prove themselves.
So rather than chasing every new listing, continue your SIPs — they’ll automatically capture the winners once they mature.
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9. My Rule of Three — Automate, Review, Repeat
The best financial plans are beautifully boring.
Automate your SIPs — make them non-negotiable.
Review once a year — not every week.
Repeat for 10 years — wealth is built across cycles, not headlines.
Follow this rhythm, and money stops being stressful — it becomes purposeful.
10. The Miracle of Monotony
A retired client once told me, “Taresh, my SIP felt boring for 15 years. Then one day, it became magic.”
That’s the essence of compounding — silent, invisible, inevitable.
You don’t see it working month-to-month, but decade-to-decade it transforms lives.
So, if you’re feeling impatient today, remember: the world’s best wealth builders aren’t traders — they’re believers.
Conclusion: The Richness Way of Investing
In 2025, smart investing isn’t about chasing trends — it’s about aligning your money with meaning.
Mutual funds remain the most elegant bridge between your goals and India’s growth.
Stay invested. Stay calm. Stay consistent.
Because the one who keeps investing when others are doubting, earns quietly when others are waiting.
As I always remind my students at The Richness Academy —
“Money grows when your patience outperforms your fear.”
Disclaimer: The views expressed are for educational purposes only and do not constitute financial, investment, tax, or legal advice. Please consult qualified professionals before making decisions. Mutual fund investments are subject to market risks.
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The author of this article, Taresh Bhatia, is a Certified Financial Planner® and advocate for female empowerment. For more information and personalized financial guidance, please contact taresh@tareshbhatia.com
He has authored an Amazon best seller-“The Richness Principles”. He is the Coach and founder of The Richness Academy, an online coaching courses forum. This article serves educational purposes only and does not constitute financial advice. Consultation with a qualified financial professional is recommended before making any investment decisions. An educational purpose article only and not any advice whatsoever.
©️2025: All Rights Reserved. Taresh Bhatia. Certified Financial Planner®
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