In the world of asset management, the pursuit of consistent performance is a common yet often elusive goal. Akhil Chaturvedi, Executive Director at Motilal Oswal Asset Management, challenges this conventional wisdom in a thought-provoking presentation at the Hubbis India Wealth Management Forum 2026. He argues that the focus on individual fund managers' performance is misguided and that the real key to success lies in portfolio construction and strategic allocation across different investment styles.
Chaturvedi begins by highlighting a persistent request he's heard over his 25-year career: the demand for investment products that consistently outperform over time. While this is a reasonable expectation, he reveals a surprising reality: no active fund manager or investment style can consistently outperform across every market cycle. This realization, he suggests, should not be seen as a failure of the industry but rather as an inherent aspect of active management.
To illustrate his point, Chaturvedi poses three thought-provoking questions. He asks the audience to recall the best-performing funds in 2020 and 2021, and then in the past 12 months. While some hands go up for the recent period, the silence when asked about future performance is telling. This silence underscores the industry's tendency to extrapolate recent performance into the future, often leading to disappointment.
The crux of Chaturvedi's argument lies in the distinction between performance and style. He explains that fund managers, while striving to outperform an index, commit to specific investment philosophies like growth, value, or quality. These philosophies are consistent, but the performance around them is not. Managers cannot guarantee consistent performance across all market conditions, and their strategies will have ups and downs.
Chaturvedi provides a historical perspective on style leadership in the Indian market, noting how it has rotated over the years. He identifies periods favoring quality-oriented managers, value approaches, and growth-oriented strategies, each lasting a few years. This cyclical nature of leadership highlights the difficulty of predicting future performance.
The practical implication of this dynamic is a behavioral trap. Investors and advisers often allocate towards a style after it has performed well and reduce exposure when it lags. This behavior, known as the 'Timing Trap,' results in lower returns compared to the index. Chaturvedi attributes this to the industry's tendency to extrapolate recent performance, leading to over-allocation during strong periods and under-allocation during weaker ones.
To address this issue, Chaturvedi proposes a redefinition of the adviser's role. Instead of focusing on fund selection, he suggests that advisers should become 'managers of managers.' This involves constructing portfolios with deliberate allocation across complementary investment styles, tailored to each client's risk profile. By embracing this approach, advisers can bring consistency to client portfolios, even if individual fund managers are inconsistent.
Chaturvedi emphasizes the importance of discipline in this process. He advises selecting the best manager within each style and then holding the position through periods of underperformance. This 'buy right and sell tight' strategy ensures that investors remain invested in the right styles, even when they are out of favor. This approach, he argues, is more effective than chasing recent winners.
In conclusion, Chaturvedi challenges the industry to reframe its expectations. He encourages advisers to manage expectations and focus on portfolio construction, expectation setting, and investor discipline. By doing so, they can deliver consistent outcomes for clients, even in a market where consistent performance from individual fund managers is elusive. This shift in perspective, he believes, is crucial for building trust and long-term success in the asset management industry.
