‘Combine SIP discipline, SWP convenience to build wealth’: A. Balasubramanian on lasting retirement solutions

The stock market may feel jittery right now, but for veteran fund manager A. Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC, this is just another turn in the long road of market cycles he has witnessed. For him, volatile phases don’t call for bold bets; they call for habits. And the two habits he believes can truly change an investor’s life are surprisingly simple: invest regularly through SIPs and secure the future through SWPs.

In a conversation with Business Today TV on Tuesday, Balasubramanian painted a picture of an economy that is fundamentally strong — GDP is rising, inflation is easing, sectors from autos to healthcare are showing momentum, and credit growth is improving. Yet, mid- and small-cap stocks, where retail investors are often most active, have come under pressure.

That weakness, he said, isn’t a story of fading fundamentals. It’s a story of supply overwhelming demand. A wave of IPOs, promoter stake sales, and fundraises has entered the market faster than investors—especially foreign investors—can absorb.

Speaking to Business Today TV, Balasubramanian reflected on a market landscape where strong economic data and rising GDP coexist with sharp corrections in mid- and small-cap stocks. High-frequency indicators, from autos to hotels to healthcare, are showing steady improvement. He said inflation has eased, RBI rate cuts have begun working their way through the system, and credit growth is picking up. Yet the segments most popular with retail investors are under pressure.

"Too many IPOs, too many promoters selling, too much supply chasing limited liquidity. Domestic SIP flows are strong, yes, but they can only absorb so much. Foreign investors, unsettled by global interest-rate moves and currency swings, are not filling the gap," he said.

Investing for beginners

The message for first-time investors: start with habit, not timing. Balasubramanian returned again and again to one point: wealth is built not by guessing the right moment to enter the market, but by showing up consistently.

To young earners, he offered a single piece of advice—almost like a life mantra: “Make SIP a part of your life, just like paying rent or buying groceries,” Balasubramanian said.

SIPs, he said, do more than grow money. They grow discipline—a quality that keeps an investor steady through the noise, the corrections, and the endless chatter that surrounds markets. Over decades, this discipline becomes a silent engine of wealth creation.

And when those earning years are behind you, he said, it’s time for the next habit: SWPs. Systematic withdrawal plans allow retirees to convert their lifelong discipline into a dependable monthly income—something steady, predictable, and emotionally reassuring in a world where expenses rise and uncertainties linger.

How to allocate your money thoughtfully

When asked about the ideal allocation for a fresh investor putting ₹10 lakh—or even ₹10 lakh a month—into Indian equity funds, Balasubramanian explained that the foundation should be built on flexibility and discipline. “About 55–60%, or even up to 70% of the allocation, should go into flexi-cap funds, because they invest across market caps and adapt well to different cycles,” he said.

He added that the next layer should be multi-asset funds that diversify across equity, fixed income, gold and silver. The third component, he noted, should be what he calls a “balance-or-don’t-ditch fund,” or a balanced advantage fund, which helps investors stay invested even during extreme volatility.

“People often make the mistake of withdrawing when markets turn volatile—so this fund should be treated as a permanent asset class, and 65–70% of SIPs should ideally go there,” he explained. For long-term wealth creation, he stressed the importance of converting SIPs into flexi-cap, multi-asset and balanced advantage funds. Small- and mid-cap funds, he said, can generate meaningful alpha but come with higher intermittent volatility. “These are 7–8 year products. If someone is doing SIPs in mid- or small-cap funds, they should continue as long as they remember they are investing for 10 years and beyond.”

He emphasised that maintaining discipline across all asset classes is more important than chasing short-term returns. “My belief is that most of the allocation should go toward flexi-cap, multi-asset and balanced advantage funds, with only a portion towards small- and mid-caps.” He also clarified that large-cap exposure can be comfortably achieved through flexi-cap funds themselves. Wrapping up, he reiterated the importance of long-term planning: “The SIP-plus-SWP approach is the bedrock of financial growth, and a significant portion of your money should stay invested in flexi-cap funds.”

Category	Recommended Allocation	Purpose / Rationale	Time Horizon
Flexi-cap Funds	55–70%	Adapt across market cycles; offer built-in diversification across large-, mid- and small-caps	Long term
Multi-Asset & Balanced Advantage Funds	Meaningful allocation (supporting role)	Reduce volatility, balance equity exposure, provide stability during market swings	Medium to long term
Mid- & Small-cap Funds	Small portion; only for patient investors	Potential to generate higher alpha, but comes with higher volatility	7–10 years minimum