Ravi Samalad gives you a glimpse of a typical day in the life of one of the best regarded CIOs, Sankaran Naren, Chief Investment Officer - Equities of ICICI Prudential Mutual Fund
Naren leaves his Bandra (W) home at 8 am and reaches office by 8.15 am. The morning journey to his Bandra (E) office is a breeze due to limited traffic.
As soon as he reaches office, Naren first checks his inbox. He then glances at all the newspapers available in the office. If he gets time in between his busy schedule, he follows markets on CNBC.
Every morning he has a meeting with his team at 9 am where various investment ideas are discussed. Naren’s team has a weekly meeting on Friday where they discuss various sectors.
We met in his office yesterday before which he had a meeting with a company’s top management. The discussion was around ‘Risk Management’ in a mutual fund scheme.
Naren has to interact with a wide range of people like companies top management, brokerage house CEOs, distributors, sales head and so on a daily basis. He has to be in constant touch with distributors through conference calls and distributor events.
Being chief investment officer of one of India’s largest fund house isn’t a cake walk. He has to face a constant wave of questions. People expect him to know where market is heading, for which he sometimes has no straightforward answer. “Everyone wants to know where market is going. That is the one common question everyone asks for which none of us has an answer. We tell them not to bother too much about where market is heading. We tell distributors and customers to invest through SIP/STP, do a systematic asset allocation and invest in unpopular asset classes,” says Naren.
He is a little perturbed by people who read too much into one year performance of schemes. “This is the endless battle I have with everyone. It’s a deeply entrenched investor behavior to look at one year return. I have to tell people to stop looking at one year return, which is not an easy job,” observes Naren.
Naren is nudging people to invest in ICICI’s Dynamic Plan which buys when market corrects and sells during a high. Naren doesn’t get gung ho about star stocks. He looks for dogs of the market. “I look for the dogs of the markets which is my strength. A lot of my colleagues look for stars,” says Naren. He has an ace team which is adept at bottom up approach.
Naren joined ICICI Prudential AMC in October 2004. He oversees the equity investments across the mutual fund, portfolio management services (PMS) and international advisory business. Naren has an over 20 years in wide areas like investment banking, fund management, equity research, and stock broking operations.
He was recently awarded the best equity fund manager award for managing ICICI Discovery Fund which posted a 26 per cent CAGR since inception.
He is not deeply involved in fund management these days as he has a broad spectrum of responsibility of helming his entire equity team and developing equity investment strategies.
He doesn’t buy stocks every day. “I’d rather buy more carefully than sell easily. But we look for opportunities. In a year, some 20 to 25 stocks are added depending on their value,” says Naren.
Naren doesn’t chase hot stocks. His mantra is simple. Identify a neglected sector or a stock before anyone else does and hold it till it comes into limelight. “You should be able to identify a theme much before others do. You have to have a mixture of top down and bottom up thinking,” shares Naren.
Naren bought some mid cap stocks in 2005. The stocks didn’t perform up to his expectations till 2008. From 2009 onwards they have turned out to be multi baggers. “You have to look at sectors and stocks which are not researched well. If you are focused on a stock which is not researched well then I become pretty interested in it. This strategy has been helpful from an investment standpoint. So the ability to think what will become a big think tomorrow is crucial,” explains Naren.
The 44 year old Naren glances at a lot of newspapers, annual reports and research reports which keep him updated. These days he spends a lot of time reading how global strategists think. It is not directly linked to investments but it helps him get many insights in developing a thought process.
Naren says that one of the attributes a fund manager has to have is emotional balance. “You should be willing to take setbacks. You should know that the markets can do different things compared to what you think. You should be able to act well whenever panic hits you,” says Naren.
When asked about how he feels when the market sees a huge correction he says it doesn’t worries him a lot. “The longer you are in this business, the more comfortable it is. Markets are not under your control. Your investment and thought process in your control. In the initial years it is a bit painful because markets are not in your control,” says Naren.
Naren is a B. Tech from IIT Chennai. He has MBA finance degree from IIM Kolkata under his belt. When quizzed about the importance of academic qualifications in fund management, Naren believes that it is of little importance in taking right calls at the right time. “In India, people acquire degrees to just show that you are hard working. You cannot anticipate unforeseen events like the one happened in Japan. You can lose 20 per cent of returns in one day. It is very easy for us to believe that we are in control of the results. I have learned from introspection. This business is not about arithmetic,” says Naren.
“The problem in investing is that you are operating in a market where you do not have control over the end result. The end result is dependent on many things. You make mistakes as an investor and continuous making them. You introspect and try to correct such mistakes going ahead,” adds Naren.
Naren says that downturn in markets are a part of his life. He also has to meet the company management team before he buys a stock. But the job doesn’t end there. It is just one part of the process. “Companies in general tell you what they want to tell you,” says Naren.
Naren was among the few who smelt a rat in Satyam. During its public issue in late 1990s, he had refused an underwriting proposal due to the performance of its group firm Satyam Spinning Mills. The issue was oversubscribed 17 times. After the stock got listed on the exchange, Naren was tracking it very closely. He felt that he had gone wrong in rejecting the underwriting proposal. The decision turned in his favour in 2008 when the Satyam saga broke out. “It can take years for a call to go right,” observes Naren.
For budding fund managers he advises them to manage their own portfolio before managing public money. “You have to be emotionally well balanced to make money in financial markets. A person like Warren Buffet became successful over a long period of time,” concludes Naren.
On most days, he heads back home around 7 to 7.30 pm. His travel back home is little exhaustive. Sometimes it takes him forty minutes to reach his residence.
He likes to unwind with his family and close friends. His new hobby is playing computer bridge. As we wind up our interaction he has to get ready for meeting with a CEO of a brokerage firm after which he will head straight home.
