Asset allocation a sure shot way of making money: S Naren
At the end of the day, you can't control greed and fear. No one knows the top, says Naren.
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Speaking at ETMarkets Global Summit, the executive director and CIO of ICICI Prudential Asset Management said that different asset classes go through different cycles, and in his 30-year odd experience in the financial market, it has never been a case when all asset classes performed well simultaneously.
Naren said real estate markets did not perform between 1995 and 2003. From 2012 to date, real estate market’s growth stood at a mere 0-2 per cent.
“I find everyone quite happy with equities. But amid sixes and fours in a cricket matches, you get caught too! The boom phases do not coincide," he said.
From December 2006 to December 2017, the assets under management for smallcap category surged 1,668 per cent in absolute returns, but it has fallen 19.2 per cent since then, he noted.
Even gold goes through different cycles, he added.
"At the end of the day, you can't control greed and fear. No one knows the top. It's only visible in hindsight," he said.
Today, value stocks seem to reflect GDP growth, he said, adding that value funds have stopped getting money. Equity is somewhere in the middle of asset allocation strategy, he said.
"Equity is an asset class to invest in when times are bad, and taken out when times are good. Asset allocation today means investing in value stocks, in credit risk funds, investing in real estate over the next few years," he said, adding that he believes in dynamic asset allocation.
“That is the best way to invest for the next 20, 30 or 40 years. We also like hybrid funds in general," he said.
From equity research to stock broking operations, and from investment banking to fund management, Naren has taken various roles in the financial services industry.
He has been working with ICICI Prudential AMC since October 2004. He looks after investment across the mutual fund and the international advisory businesses at the fund house, where he has been instrumental in the overall investment strategy development and execution.
At present, he directly manages ICICI Prudential Multi Asset Fund (erstwhile ICICI Prudential Dynamic Plan), which has Rs 11,500 crore as assets under management (AUM).
Naren also manages ICICI Prudential Large & Multi Cap Fund (erstwhile ICICI Prudential Top 100 Fund) that has Rs 3,714 crore AUM. He has been managing the two schemes since February 2012.