Mumbai (Maharashtra) [India], April 10: India's investment landscape stands at a crucial inflection point. With the nation's markets outperforming major global economies post-pandemic and its weight in the MSCI Emerging Markets Index surging from 8% in 2020 to 18.5% in 2025, the stage is set for transformative growth. Yet for investors seeking to capitalize on this potential, significant challenges remain in achieving consistency in their long-term returns amid constantly shifting market cycles and changing trends.
The Untapped Opportunity
The democratization of investing in India has accelerated dramatically, mirroring the mutual fund revolution the United States experienced between 1980-2000. Monthly systematic investment plan (SIP) contributions have skyrocketed from ₹1,600 crore in 2014 to ₹25,999 crore by Feb 2025 – a 16-fold increase that demonstrates how these investment vehicles have become the core allocation in Indian investors' portfolios.
Retail participation has simultaneously surged, with unique mutual fund investors expanding from 1.8 crore to 5 crore between 2018 and 2024. As household financial savings increasingly flow into capital markets, the opportunity to unlock India's investment potential has never been greater.
The Performance Paradox
Despite this impressive democratization, a critical challenge faces investors: market cycles continuously shift winners, making consistent outperformance difficult. Data from 2014-2024 reveals dramatic leadership changes across sectors – PSU Banks topped returns at 69.9% in 2014, while Pharma led with 39.7% in 2024, with numerous sectors taking turns at leadership in between.
This cyclical nature creates a performance paradox. Since SEBI's recategorization in 2018, the Nifty 50 index has outperformed more than 50% of large-cap active funds in 4 out of 7 calendar years. Similarly, only one-third of flexi-cap funds managed to beat the Nifty 500 index over a five-year period.
While passive investing offers one solution, truly unlocking its investment potential requires innovative approaches that combine systematic discipline with strategic flexibility.
Tailwind's Model-Driven Approach
Recognizing this opportunity, Tailwind Asset Management Company (AMC) has introduced Alpha Edge Portfolio Management Service (PMS), launching with ₹50 crore in assets under management. This sophisticated investment solution employs a "passive yet active" approach that leverages proprietary quantitative models to generate consistent alpha while maintaining disciplined risk management.
"In today's dynamic market, our systematic approach offers a compelling alternative to traditional bottom-up investment strategies," explains Vivek Goel, Founder and CIO of Tailwind AMC. With over seven years of experience in passive investing, including working at passive investment desk at Kotak Wealth Management where he scaled allocations to over ₹5,000 crore, Goel brings significant expertise to the challenge of unlocking India's investment potential.
A Framework for Consistent Performance
Alpha Edge PMS employs a multi-layered investment approach guided by a philosophy summarized as "Simple. Stable. Secure." These pillars guide the strategy along with the aim to identify indices with superior risk-adjusted returns and dynamically adjust allocations based on market conditions.
This framework has demonstrated promising results. Backtested data shows the strategy would have turned a ₹50 lakh investment in January 2015 into ₹2.4 crore by December 2024 – a 5x return compared to the Nifty 50 TRI's 3x over the same period.
More importantly, the approach has shown resilience across market cycles. During bullish periods like June 2022 to September 2024, the strategy delivered 113% returns versus 73% for Nifty 50 TRI. In bearish phases like February 2020 to March 2020, it limited drawdowns to -33% compared to -37% for the benchmark.
Anticipating Investment Evolution
As India potentially follows the US trajectory, where passive investments now represent over 50% of equity investments compared to just 10% in 2000, strategies that combine quantitative rigor with active oversight may represent the future of sophisticated investing. Early signs of these trends are visible with large players focused on passive strategies entering the industry – including Zerodha and Groww, among several others.
With a minimum investment of ₹50 lakhs and a fee structure designed to align manager incentives with investor outcomes, Alpha Edge PMS offers high-net-worth individuals a systematic pathway to potentially unlock India's investment potential. As the market continues to mature, such model-driven approaches may increasingly serve as the bridge between passive investing's low-cost efficiency and active management's pursuit of outperformance.
"Rather than pursuing high-risk, high-reward allocations, we prioritize systematic risk management to deliver sustained outperformance," Goel concludes. In a market defined by cycles and change, this balanced approach offers a compelling framework for investors seeking to capitalize on India's remarkable growth story.
Vivek Goel is the Founder and CIO of Tailwind AMC. He is MBA Finance from IIM-Lucknow, CA, FRM. Previously, he worked with Kotak Wealth managing over $1 billion in Ultra HNI portfolios. For more information, please visit https://tailwindamc.com.
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