With valuation gap between large-cap and mid-and small-caps being at a two-decade high, the former have become meaningfully cheaper. George Heber Joseph, Chief Investment Officer and Chief Executive Officer – Equity at ASK Investment Managers tells Ananya Grover that such divergences have created attractive entry points for large-cap investing. Excerpts:
You have applied for a mutual fund license. Why are a lot of PMS companies also launching mutual funds?
It is a natural progression for us. For over three decades, ASK Group has been catering to sophisticated investor segments – UHNIs, HNIs, family offices, and global investors through conviction-led PMS. Launching mutual funds enables us to extend that discipline to retail investors, widening participation without diluting our investment philosophy.
PMS and mutual funds will continue to co-exist because they are built for distinct outcomes: PMS offers personalisation and concentration while mutual funds deliver diversification and accessibility. Across both, our commitment is same – disciplined investing that aims to deliver consistent, sustainable long-term risk-adjusted returns over market cycles.
What kind of cyclicals are moving the market?
Every decade has a distinct market theme. The 1990s were driven by technology, media and telecom; the 2000s by infrastructure; 2010–20 by consumption; and from 2020 onwards, we are seeing the next infrastructure and capex-led cycle emerge. Navigating these shifts requires disciplined cycle awareness.
Currently, the valuation gap between large caps and mid-and small-cap stocks is at a two-decade high. Large caps are meaningfully cheaper, and historically, such divergences have been attractive entry points for large-cap investing. We have consciously skewed our portfolios towards large-caps, particularly Nifty 50 companies. This positioning has already started delivering better risk-adjusted outcomes. While valuations in mid and small caps may correct further or earnings may catch up over time, we do not see merit in chasing overvaluation at this stage. Our stance remains disciplined: allocate where fundamentals, quality, and valuation comfort align—calibrated to the market cycle.
Are you expecting FII flows to come back?
We expect FII flows to return selectively, contingent on valuation comfort and rupee stability. Earlier, both the rupee and Indian markets were expensive, which has corrected to an extent. Large-cap valuations are now far more reasonable, and if FIIs re-engage, they are more likely to deploy capital into large-cap stocks rather than mid and small-caps, given liquidity depth, benchmark alignment, and execution scalability.
How are you looking at a lot of IPOs that are coming?
Historically, IPO waves tend to coincide with promoters selling into strong markets, which does not always offer the best alignment for investors. While there may be high-quality IPOs that merit participation from a long-term perspective, we believe in a post-listing track record and promoter behaviour. Given the depth of India’s listed universe – hundreds of well-established, liquid companies with transparent histories – we prefer to deploy capital where we have valuation comfort, proven governance, and visible cash-flow discipline. Our stance is cautious but open-minded: analyse every IPO rigorously, participate selectively where durability and valuation comfort align.
What was the trend that stood out to you in 2025 in the market, and what is going to be your outlook for this year?
Two themes defined 2025: persistent global macro uncertainty – centred on the US fiscal backdrop and the interest-rate path – and a pronounced domestic valuation divergence. In India, mid and small caps traded at stretched multiples, warranting caution, while large caps offered better valuation comfort and liquidity.
Going forward, we believe large-cap equities offer superior downside protection and a more attractive risk-reward, potentially outperforming asset classes that have seen sharp run-ups, such as gold, silver and real estate. Cyclical sectors and lending institutions look well-positioned. Meanwhile, rising ETF penetration remains a long-term structural tailwind for capital markets.