At a retirement investment forum in February 2026, ICICI Prudential's chief investment officer Sankaran Naren offered a counterintuitive reminder as old as markets themselves: the crowd's enthusiasm is often the surest sign that an opportunity has passed. With gold and silver funds swelling from Rs 25,000 crore to Rs 4 lakh crore in just four years — even as prices reached decade highs — Naren traced a familiar human pattern of arriving late to the feast and mistaking the noise of the crowd for the signal of value. His counsel was not a prediction but a discipline: genuine value tends to dwell
Excess Capital Destroys Value: ICICI Prudential CIO Warns Against Chasing Popular Assets
Money arrives at the top and flees at the bottom.
Mark
So Naren is saying that when everyone piles into an asset, it stops being a good investment. That seems obvious, doesn't it?
Mimi
It does in hindsight. But he's showing that it happens repeatedly—infrastructure funds, small-caps, now gold. The pattern is consistent enough that you'd think investors would recognize it. Yet they don't.
Luke
Wait—he's comparing infrastructure AUM in 2005 to 2007, but he doesn't say what returns those funds actually delivered. We know performance "faltered," but by how much? And over what timeframe?
Mimi
Fair point. He's using AUM growth as a proxy for the cycle, but the actual damage to investor returns isn't quantified.
Mark
What about the gold example? He says gold AUM went from Rs 25,000 crore to Rs 4 lakh crore, and January 2026 had peak prices. But did gold prices actually fall after that, or is he just warning that they might?
Mimi
He's warning that they might. He's not saying gold has crashed. He's saying the inflow pattern—money arriving at peak prices—is historically a bad sign.
Luke
So we're looking at a prediction based on pattern recognition, not a confirmed outcome. That's important to flag. And on the real estate framework—comparing rental yields to home loan rates—that assumes rental income is stable and comparable across markets. Is that assumption solid?
Mimi
It's a useful heuristic, but you're right that it simplifies. Mumbai real estate in 2003 and 2020 are different markets with different dynamics.
Mark
He mentions that US equities had near-nil returns from 2000 to 2012, and buying in 2012 would have been value investing. But how much did they return after 2012? That's the payoff that proves the principle.
Mimi
He doesn't give that number. He's illustrating the principle—that you have to buy when things are unloved—but not showing the full reward.
Luke
And on debt funds—he says retail flows have been negligible for 4-5 years. But he doesn't explain why. Are rates unattractive? Is there a structural reason? Or is it just psychology?
Mimi
He frames it as psychology—everyone wants silver, no one wants debt. But the underlying reason for that preference isn't explored.
Mark
So the core argument is sound—money flows to what's popular, which destroys value. But the evidence is mostly pattern-based, not outcome-based.
Luke
Exactly. We're seeing the inflows, we're seeing the timing. We're not seeing the subsequent returns that would prove the thesis.
The Pulse
- Precious metal funds have absorbed more fresh capital in recent years than equity funds, yet gold and silver prices are near their most expensive levels in a decade — a collision of enthusiasm and poor timing.
- The pattern is not new: infrastructure funds, small-cap funds, and now metals have each attracted peak inflows just as returns began to deteriorate, suggesting a systemic failure of investor timing.
- Large-cap equities, trading around 20 times median earnings, look relatively inexpensive compared to precious metals — yet capital has moved in the opposite direction, away from the cheaper asset and toward the costlier one.
- Debt mutual funds, largely ignored by retail investors for four to five years, are quietly emerging as a candidate for overlooked value in an environment where nearly every popular asset class appears stretched.
- Silver, which carries the volatility of a small-cap stock but none of its earnings, dividends, or cash flows, is flagged as one of the riskier long-term holdings available — a warning aimed at investors treating it as a safe haven.
At a retirement investment forum in February 2026, ICICI Prudential's chief investment officer Sankaran Naren offered a counterintuitive reminder as old as markets themselves: the crowd's enthusiasm is often the surest sign that an opportunity has passed. With gold and silver funds swelling from Rs 25,000 crore to Rs 4 lakh crore in just four years — even as prices reached decade highs — Naren traced a familiar human pattern of arriving late to the feast and mistaking the noise of the crowd for the signal of value. His counsel was not a prediction but a discipline: genuine value tends to dwell in the places investors have already abandoned.
On February 20, 2026, Sankaran Naren of ICICI Prudential AMC addressed a retirement investment audience with a principle that runs against instinct: the more money an asset class attracts, the less value it tends to offer. Drawing on the documented work of former Merrill Lynch strategist Richard Bernstein, Naren described a cycle that repeats reliably — capital floods in at peaks, flees at troughs, and leaves ordinary investors holding assets they bought too late and selling ones they abandoned too soon.
The historical record is unambiguous. Infrastructure funds grew sevenfold between 2005 and 2007, then underperformed. Small- and mid-cap funds quintupled between 2013 and 2017, then struggled. In each case, the surge in assets under management was itself the warning sign — a signal that the easy returns had already been claimed.
The most striking current example is precious metals. Gold and silver funds held Rs 25,000 crore in 2022. By January 2026, that figure had reached Rs 4 lakh crore — and in that same month, inflows into metal ETFs surpassed inflows into equity mutual funds for the first time. This occurred precisely when precious metals were trading near their most expensive levels in years. Naren called it the inverse of value investing: not buying low, but buying high and calling it caution.
The relative comparison sharpens the point. Large-cap equities, at roughly 20 times median earnings, are not cheap in absolute terms — but against gold and silver, they look inexpensive. Capital has nonetheless moved toward metals and away from stocks, choosing the costlier asset over the cheaper one.
Naren extended the value framework beyond equities. In real estate, he offered a simple measure: when the gap between rental yields and home loan rates narrows to around 3 to 3.5 percent, the asset is attractive; when it widens to 7 percent or more, it has grown expensive. Mumbai real estate was cheap in 2003 by this measure, expensive by 2013, and offered value again in 2020. The same logic applies across geographies — US equities delivered almost nothing between 2000 and 2012, yet many investors entered only after 2021, well after the opportunity had matured.
In the current environment, where even gold looks expensive, Naren pointed toward debt mutual funds — largely ignored by retail investors for four to five years — as a potential source of overlooked value. Silver, he cautioned, behaves like a small-cap asset without any of the financial anchors — no earnings, no book value, no dividends — yet carries global volatility and is increasingly treated as a refuge. The discipline required, he suggested, is the willingness to look where the crowd is not.
Sankaran Naren, the chief investment officer at ICICI Prudential AMC, stood before an audience at the Outlook Money 40 After 40 Retirement Expo on February 20, 2026, and delivered a warning that cuts against the grain of how most people invest: the more money that flows into an asset class, the less likely it is to deliver returns.
This is not a new observation. Naren pointed to the work of Richard Bernstein, a former Merrill Lynch strategist, who documented a pattern that repeats across market cycles. When capital floods into an asset class, valuations rise and opportunity shrinks. When an asset class sits neglected and capital flows dry up, that is often where genuine value hides. The problem, Naren explained, is psychological. Money arrives at the top of cycles and flees at the bottom, leaving investors to chase what has already risen and abandon what has already fallen.
History offers clear examples. In 2005, infrastructure funds held about Rs 3,500 crore in assets under management. By December 2007, that figure had ballooned to Rs 25,000 crore. What followed was deteriorating performance. The same pattern played out in small- and mid-cap funds, which grew from roughly Rs 13,000 crore in 2013 to Rs 67,000 crore by 2017, only to struggle through the years that followed. These were not isolated incidents. They were textbook cases of money arriving too late.
The most vivid example today sits in precious metals. Gold and silver funds held Rs 25,000 crore in assets in 2022. By January 2026, that figure had swollen to Rs 4 lakh crore. In that same month, inflows into gold and silver exchange-traded funds exceeded inflows into equity mutual funds for the first time. Yet January 2026 also marked some of the highest prices for precious metals in the past decade. Investors had poured money into the asset class precisely when it had become most expensive. Naren described this as the inverse of value investing—not buying low and selling high, but buying high and calling it prudence.
The relative picture makes the contradiction sharper. Large-cap equities trade around 20 times median earnings, which Naren acknowledged is not cheap. But compared to gold and silver, equities look inexpensive. Yet capital has flowed into metals and away from stocks. This reversal of logic—choosing the more expensive asset over the cheaper one—reveals how far investor behavior has drifted from value principles.
Naren emphasized that value investing is not confined to equities. It applies to real estate through a simple framework: compare rental yields against home loan rates. When the gap between the two narrows to around 3 to 3.5 percent, real estate becomes attractive. When the gap widens to 7 percent or more, the asset class has become expensive. In 2003, Mumbai real estate was cheap—home loan rates sat around 7 to 7.5 percent while rental yields were 3 to 4 percent. By 2013, rates had risen to 10 percent while yields had fallen to 2 to 2.5 percent, and prices had nearly doubled. In 2020, the gap narrowed again, and real estate offered value once more.
The same principle applies to equities across geographies and time. US equities delivered almost no returns between 2000 and 2012. Buying in 2012 would have been value investing. Instead, many investors entered the market between 2021 and 2024, after strong performance had already occurred—the opposite of value investing. Indian equities and real estate both delivered muted returns from 1993 to 2003, a period that offered genuine opportunity to those with the psychological fortitude to buy after a prolonged downturn. That kind of courage is rare.
Today presents an unusual challenge. Historically, when most asset classes appeared expensive, gold offered refuge as a cheap alternative. This time, even gold looks expensive. In this environment, Naren suggested that debt mutual funds may deserve attention. Retail investors have shown negligible interest in debt funds over the past four to five years. Silver, meanwhile, behaves like a small-cap asset without earnings, book value, dividend yield, or cash flow, yet trades globally and carries the volatility that comes with such characteristics. From a long-term perspective, Naren said, silver appears to be among the riskier asset classes available. The question facing investors now is whether they have the discipline to look where no one else is looking.
Notable Quotes
In 1999, people believed value investing was dead. By 2001–02, they realised it was back.— Sankaran Naren, ICICI Prudential AMC CIO
You have to have the guts to buy after a big negative or low-return phase. That is very difficult psychologically.— Sankaran Naren, ICICI Prudential AMC CIO
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Economy & Finance