Dear Investor,

India's macroeconomic setup continues to be robust, yielding to sustained economic growth, manageable inflation, and a favourable investment climate. The country's GDP has consistently outpaced global averages, driven by strong domestic demand, government initiatives, and a growing middle class. While challenges such as rising interest rates and geopolitical tensions persist, India's overall economic outlook remains positive, positioning it as a major player in the global economy.

As we navigate the current market landscape, the mutual fund industry continues to witness significant inflows from new offerings, resulting in slightly elevated cash levels for many fund houses. Despite this, Aditya Birla Sun Life Mutual fund remains committed to following a disciplined investment strategy, historically having maintained cash levels between 3% and 5%, with equity mandates designed to stay predominantly invested.

Globally, we anticipate a cautious shift in monetary policy, with potential cuts on the horizon, though they are expected to be measured. The Fed has already pivoted but their objective will be to balance growth and inflation. In contrast, the Indian economy has remained resilient, with controlled inflation and stable borrowing costs. The Reserve Bank of India is likely to keep rates steady for now, supporting growth in key sectors.

Given the current market conditions, we encourage a balanced investment approach. While equity markets have performed well, moderation in returns is expected. At the same time, fixed income as an asset class offers renewed potential as rates begin to ease. Hybrid funds, such as Balanced advantage funds and Multi-asset allocation funds, provide an optimal mix of different asset classes, enabling investors to capture the upside in these asset classes while protecting potential downsides with their inherent asset allocation framework that is actively managed. We advise maintaining a diversified portfolio to navigate market uncertainties effectively.

At Aditya Birla Sun Life Mutual Fund, we remain committed to providing value, ensuring that our portfolios are aligned with the evolving market dynamics and the long-term goals of our investors.

Happy Investing!

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Regards,
A. Balasubramanian