In this interview with ET Markets, Chutkey explains why a balanced approach, not aggressive equity bets, suits the next 12-24 months.
Roshan Chutkey, fund manager at ICICI Prudential AMC overseeing schemes worth ₹48,450 crore, believes India has entered what he calls a "moderate-return environment" — the reasoning behind the newly launched ICICI Prudential Balanced Hybrid Fund, whose NFO is open for subscription July 14, investing 40-60% each in equity and debt.In this interview with ET Markets, Chutkey explains why a balanced approach, not aggressive equity bets, suits the next 12-24 months. Edited excerpts:You have said this is the right time for a Balanced Hybrid Fund. Why do you believe so? Does that also mean you are structurally less bullish on equities over the next 12-24 months than you were a year ago?If you look at the macro backdrop, global growth is slowing and global trade remains under pressure. Major economies across the world continue to face their own structural challenges. While India has remained relatively resilient, it cannot remain completely insulated from global headwinds. The positive aspect is that India’s policymakers have been proactive in addressing these challenges. Besides, our corporate balance sheets are in good shape. Also, valuations for many large cap names are reasonable compared to their own fundamentals. Taken together, this suggests we are entering a moderate-return environment.A few years back, I was relatively cautious because in a slowing global environment, consumption and private investment by themselves cannot drive growth. And now, while government spending has been fiscally prudent, with a sustained rupee depreciation policy of the last 18 months, exports can do the heavy lifting of supporting growth. On an incremental basis, policy has become more favourable.Therefore, while I remain constructive on equities, a balanced approach is likely to be an optimal path for investors. This is because I do not expect an exceptionally strong bull market over the next couple of years.The fund will invest 40-60% in equities. If the fund were to begin investing today, how would you approach the asset allocation?Investors choosing this product have already made an important asset-allocation decision by opting for a balanced strategy. While we do have an internal allocation model, this product is designed to maintain meaningful exposure to both equity and debt. Investors should think of it as a solution where the broad asset allocation is already pre-decided in line with their risk appetite.Doesn’t that also increase the chances of underperformance during a strong equity bull market?If we witness a roaring bull market, then yes, a Balanced Hybrid Fund may underperform a pure equity fund. That is because a portion of the portfolio will always remain invested in debt. However, investors are also rewarded with significantly lower volatility and a smoother investment journey.If someone is starting their investment journey today, would you recommend investing entirely in a Balanced Hybrid Fund or building a portfolio of diversified equity funds?For a first-time investor, a Balanced Hybrid Fund can be a starting point since new investors haven’t experienced market corrections or bear markets. Beginning with a balanced strategy provides investors with a smoother entry into equity investing while cushioning the portfolio from sharp drawdowns. Such an approach shields investors from the full volatility of an aggressive equity portfolio from day one.Why choose a Balanced Hybrid Fund instead of other hybrid categories?Every category within the hybrid fund universe has a distinct investment objective and is designed to address a specific investment need. Aggressive Hybrid Funds prioritise growth over capital preservation, while Conservative Hybrid Funds place greater emphasis on preserving capital. Balanced Hybrid Funds seek to strike a balance between these two objectives, aiming to deliver long-term wealth creation while helping manage downside risks. In that sense, it is balanced in nature.Balanced Advantage Funds have a more flexible
ET Intelligence Group: The performance of Tata Consultancy Services (TCS) in the June 2026 quarter was on expected lines with sequentially flat dollar revenue, margin contraction and sustained order flow.Amid top line deceleration, the country's largest software exporter has been reporting traction in new contracts involving solutions based on artificial intelligence (AI) platforms. However, AI revenue currently forms only a small portion of the total revenue. To improve client engagement in a fast-evolving technology landscape, it needs to scale up rapidly thereby requiring higher capital investments. If this has to happen without burdening the balance sheet, it requires a relook at the current policy of returning cash to investors.AgenciesNew Math Scaling investments could require a rethink of the IT major’s generous dividend policyTCS reported a double-digit sequential growth of 13.6% in annualised AI revenue, even though annualised total revenue in the June quarter failed to increase. To be sure, at $2.6 billion, AI revenue accounts for just about 8.5% of total annualised revenue of $30.5 billion, implying that it has a long way to go before AI initiatives start contributing meaningfully without affecting overall operating margins. This may require greater investments in AI capabilities and partnerships.In this backdrop, the company needs to revisit its liberal dividend policy. It paid ₹39,571 crore in dividends in FY26 while generating an estimated ₹47,288 crore in free cash flow (FCF), which is operating cash flow net of capital expenditure. In the previous three years, dividends ranged between ₹44,962 crore and ₹46,223 crore, while FCF was between ₹41,440 crore and ₹46,449 crore. This shows that it has been returning the majority of free cash to shareholders. While it may be a suitable option for a mature business such as consumer goods, a company such as TCS that caters to client requirements shaped by tectonic shifts in technology will need to divert internal accruals to invest for future growth. The dividend yield at present is over five considering the FY26 dividend, buoyed by a sharp 36% fall in the TCS stock price in 2026 so far. Historically, it has remained under three. For the June quarter, the company has declared an interim dividend of ₹12.Amid slower revenue growth, continued momentum in fresh orders may offer some solace. TCS clocked $9.5 billion in total contract value orders bagged during the June quarter, in line with the $9-10 billion range seen during the past few quarters. Its employee attrition rate remained stable sequentially at 13.6%. Its headcount expanded sequentially for the second straight quarter, this time by 9,279 to 5.9 lakh. These factors offer hope for long term growth amid short-term uncertainty.
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