Singh told CNBC-TV18 that the trend toward hybrid funds is accompanied by growing interest in precious metals like gold and silver, partly driven by recent price rallies and resulting “FOMO” sentiment.
Institutional investors, in contrast, continue to prioritise capital preservation.
Singh noted that allocations are largely directed toward low-risk, short-duration strategies including overnight, liquid, money market, and ultra-short-term funds, reflecting a preference for stability and predictable outcomes.
He highlighted that across both retail and institutional segments, there is sustained demand for diversified, risk-mitigating solutions such as gold, arbitrage strategies, and select specialized offerings, signaling a broader shift toward prudent and balanced asset allocation approaches.
Fund flows reflect preference for stability and diversification
Investor inflows in January 2026 indicate a tilt toward stability and diversification.
Debt funds recorded the highest inflows at ₹74,827 crore, reflecting a focus on capital preservation and low-duration avenues.
Equity funds saw moderate inflows of ₹24,028 crore, with flexi-cap funds leading at ₹7,672 crore, underscoring continued demand for dynamic allocation strategies. Hybrid funds attracted ₹17,356 crore, driven by multi-asset and arbitrage strategies.
Passive funds, particularly Gold ETFs, saw record inflows of ₹24,039 crore, highlighting gold’s growing role as a core diversification and hedging asset.
No shift between active and passive strategies
Singh emphasised that there is no decisive shift toward either active or passive funds. Investors are blending both approaches: passive products like Gold ETFs are used for cost-efficient diversification and risk hedging, while active hybrid strategies continue to attract strong participation for professionally managed, risk-balanced allocation.
Risk appetite moderates post-2025 volatility
Reflecting on market performance in 2025, Singh said investors are adopting a more balanced and calibrated approach. “Despite volatility, investors continue to participate in markets, although with greater caution, emphasising diversification and risk-adjusted outcomes,” he said.
There is a shift away from aggressive, return-chasing behaviour toward strategies that combine growth with disciplined risk management.
