S Naren warns investors against chasing high performing assets
ICICI Prudential Mutual Fund CIO calls the tendency to buy assets after spectacular rallies 'anti-asset allocation'.
ICICI Prudential Mutual Fund Chief Investment Officer S Naren cautioned investors against 'anti-asset allocation' at the ET Wealth Expo in Mumbai. He described this behaviour as mistaking strong past performance for an assurance of future returns.
Naren noted that investors often rush into assets that have already delivered outsized returns. He said true asset allocation involves buying after a correction or choosing unpopular asset classes, which requires more patience.
The fund manager cited January 2026 as an example when inflows into gold and silver ETFs exceeded equity mutual fund inflows. He pointed out that silver had delivered a 216 per cent return, while gold had gained 116 per cent.
Naren said silver subsequently corrected 27 per cent, similar to the movement of a small-cap stock. He also observed that investors moved towards South Korea's Kospi index following the silver rally.
Regarding gold, Naren said he does not expect it to revert to earlier relative valuation levels. He attributed this to central banks increasing interest in gold as an alternative reserve asset after the impounding of Russia's oil and gold reserves.
While Naren does not suggest avoiding gold, he said an investor should not allocate their entire portfolio to the metal. He stated that an asset should have some gold.