Bazaar & Beyond – Interview with Ajit Menon, Senior Advisor, PGIM India 

Vivek Ananth: 
Hello everyone, and welcome to another episode of Bazaar & Beyond, where we explore the world of finance, investment, and markets to help you make smarter money decisions. I’m your host, Vivek Ananth. 

Today, we’re joined by someone who has led one of India’s top mutual fund houses and has over three decades of experience in the financial industry. Please welcome Ajit Menon, who served as the CEO of PGIM India Mutual Fund until August 2025 and is now the Senior Advisor to the mutual fund house. 

Thank you, Ajit sir, for joining us today. 

Ajit Menon: 
Thank you, Vivek. It’s always a pleasure to speak with you, and I appreciate the opportunity to be here today. 

Managing Early Retirement: Ajit Menon’s Personal Journey 

Vivek Ananth: 
Ajit sir, it’s remarkable to see someone retiring at such an early age, especially when you were at the peak of your career. You’ve managed your retirement very well. Could you share how you achieved this early in life? All of us talk about FIRE (Financial Independence, Retire Early), but you’re a living example. Most people might think of retiring in their late 30s or early 40s, but you’ve done it at 54. 

Ajit Menon: 
Thank you for that question, Vivek. You know, I’ve had a rewarding 31-year career, 26 of those in mutual funds. For the last seven years, I was the CEO of PGIM India Mutual Fund, but it was always important for me to have a plan for the future. About 14 years ago, when we built a financial plan, one of the questions I had to answer was: “When do I want to retire?” I chose the age of 55, as it gave me time to do the things I love and enjoy my life while still being financially secure. 

Having a financial advisor for the family played a big role. The key learning I’ve had is that while many people try to manage their own money, emotions like fear and greed often cloud judgment. This is why a trusted advisor is essential. They can manage your finances with a clear head and keep your goals on track. And it worked out for me. 

The Evolution of Investor Behaviour 

Vivek Ananth: 
You’ve been in this industry for over three decades. How have you seen investor behaviour change over the years? 

Ajit Menon: 
Investor maturity has grown substantially. If you look back, during events like demonetisation, instead of panicking, people actually invested more. This shift can be attributed to greater financial literacy and awareness. In fact, younger, more digitally savvy investors have entered the markets, and they’ve proven resilient. During the COVID pandemic, for instance, despite sharp corrections, very few investors redeemed their investments. This resilience and growing confidence in India’s long-term growth story have shaped investor behaviour in a big way. 

Investment Framework at PGIM India 

Vivek Ananth: 
Every fund house has its own investment framework. How does PGIM India adapt to market turbulence, volatility, or sector shifts? 

Ajit Menon: 
Our investment framework, created in 2007, has remained largely consistent over the years, but it has certainly evolved, especially after COVID. We classify stocks into seven categories based on their business characteristics, financials, and valuations—three growth-oriented and four value-oriented. This classification helps us stay disciplined across market cycles, whether it’s COVID, demonetisation, or global economic shifts. If an investment idea doesn’t fit into one of these categories, it usually means it’s not strong enough. 

Our framework ensures that we remain adaptable and identify opportunities in any market condition. It’s a structured way of making investment decisions. 

PMS vs Mutual Funds: Key Differences 

Vivek Ananth: 
You’ve managed both PMS and mutual fund portfolios. From a fund manager’s perspective, how do they differ? 

Ajit Menon: 
Historically, PMS was more about managing smaller, less institutionalized portfolios. Mutual funds, on the other hand, have better research teams, governance, and risk controls. However, today, mutual funds can run focused, high-conviction portfolios like PMS but with better oversight. For example, our Focus 20 Fund holds only 20 stocks, and we have strong processes in place for stock selection and due diligence. The institutionalisation of mutual funds has helped them perform better over time. 

Small-Cap Funds and Market Volatility 

Vivek Ananth: 
Small-cap funds often stop accepting lumpsum investments when valuations get stretched. How should investors interpret this? 

Ajit Menon: 
That’s a good point, Vivek. Valuations can indeed be expensive at times, but 10–15% corrections often create good entry points. Small-cap and mid-cap funds have done well because they rely heavily on domestic growth, and since 2019, corporate and banking balance sheets have strengthened. 

We have consistently maintained a constructive stance on small and mid-caps, and we encourage investors to use dips constructively. Long-term small-cap investors who deploy capital during corrections usually fare better than those who simply hold on through cycles. 

Overlooked Fund Categories 

Vivek Ananth: 
Is there a fund category that investors often overlook? 

Ajit Menon: 
Yes, multi-asset funds are often overlooked. Traditionally, multi-asset funds meant equity and debt. But today, with asset classes like global equities, gold, and silver, you can build a more diversified portfolio. By rotating between these assets in a disciplined manner, you can generate healthy returns while managing volatility. 

We structure our multi-asset fund using passive exposure to each asset class, and then we focus on asset-class rotation. It’s a great way to lower risk and manage volatility. 

Impact of AUM Size on Fund Performance 

Vivek Ananth: 
Does the size of a fund affect its ability to generate alpha? 

Ajit Menon: 
Yes, to a certain extent. For example, a small-cap fund becomes constrained far earlier than a large-cap fund due to liquidity and stock-selection limitations. A small-cap fund above USD 4–5 billion becomes harder to manage. For mid-caps, this constraint comes above USD 10 billion. Large-cap funds, however, can sustain much larger sizes without facing these constraints. 

Sectors and Themes to Watch 

Vivek Ananth: 
Which sectors do you think the market isn’t appreciating enough? 

Ajit Menon: 
Quick commerce is one such sector. Despite the noise, the long-term potential is huge. Another sector to watch is wealth management. India’s high-income population has grown significantly, with the number of people earning over ₹1 crore annually increasing sharply. This opens up opportunities for scalable wealth management platforms. Many of these companies start as small-caps and move up the ladder over time. 

Market Metrics: Overrated or Underrated? 

Vivek Ananth: 
Is there a market metric that you think gets more attention than it deserves? 

Ajit Menon: 
Yes, two metrics: 

1. Market-cap to GDP ratio – This doesn’t carry as much weight in a developing economy where many large companies aren’t listed.
2. Discounted Cash Flow (DCF) – While academically sound, DCF relies too much on assumptions. If your forecasts are off, the results become unreliable. 

These metrics can be misleading if used blindly. 

AI and the Future of Investment Decision-Making 

Vivek Ananth: 
How do you see AI changing the world of investing? 

Ajit Menon: 
AI will certainly take over repetitive tasks like data extraction and model building, allowing analysts and fund managers to spend more time on judgment and decision-making. But areas like behavioral insights, management evaluation, and portfolio sizing are still very human-driven. For now, AI is a great support tool, but not a replacement. 

Book and Media Recommendations 

Vivek Ananth: 
Before we wrap up, any recommendations for our viewers? 

Ajit Menon: 
Sure. 
Books: 

• Seeking Wisdom by Peter Bevelin
• Nexus by Yuval Harari
• How Not to Invest by Barry Ritholtz 

Podcasts and Blogs: 

• Invest Like the Best on the Colossus platform
• Selected articles from Enterprising Investor 

Vivek Ananth: 
Thank you so much for sharing your insights, Ajit. 

Ajit Menon: 
My pleasure. Thank you for having me. 

Closing 

Vivek Ananth: 
You’ve been listening to Bazaar & Beyond. Today’s conversation with Ajit Menon highlighted the importance of discipline, long-term planning, and seeking professional advice when managing wealth. Stay safe and invest wisely. 

Disclaimer: 
Investing in securities markets involves risks. Please read all scheme-related documents carefully before investing.