Sif Vs Mutual Funds Vs Pms Sankaran Naren Explains The Difference

TITLE: SIF vs Mutual Funds vs PMS | Sankaran Naren Explains the Difference CHANNEL: Thefynprint DATE: 2026-05-27 ---TRANSCRIPT--- Hello and welcome to the fine print. It is my great privilege to have with me today Sankran Narin who is CIO at ICIC Predential Mutual Fund to discuss Sifs. If we could begin by you know what is the gap that SIF is fulfilling you need some other kind of categories whether it is hybrid funds or specialized investment fund going to your own contrarian style. Would you say that you can express it better through an SI?

Anything that Sebi does which is in the interest of investors for the long term I think is a good development on the commodity side. Narin you’ve also got oils not just gold and silver. Now Narin uh you’re launching two new SIFS now. Hello and welcome to the fine print. It is my great privilege to have with me today Sankran Narin who is CIO at IC Potential Mutual Fund to discuss SIFS. SIF of course um is a great great uh topic of interest to investors now um because this was a product that was simply not available some of the long short strategies that are here simply weren’t there for so many years so Narin welcome thank you Narin u if we could begin by know what is the gap that SF is fulfilling when you consider mutual funds versus PMS and AI see from a different construct point of view what I believe is see markets sometimes give give you very big returns like 2020 to 24, 2004 to7, 1993 to 95 etc. In various other periods of time, market gives you very average returns. In our opinion, you know, pure equity funds are very suited for these c times when market gives very big returns. you need some other kind of categories uh whether it is hybrid funds or specialized investment funds which are valid for markets where you don’t get big returns. So you know as mutual funds you know you want to appeal to investors at all periods of time. Yeah. you know as a mutual fund manager from 2004 there was a period from 2008 to 13 where we felt irrelevant because there was no money coming into the mutual fund industry so I think what sebi did brilliantly while creating this category uh is to handle periods of time when the markets doesn’t give uh big returns you actually have a product asset class which actually suited for a moderate return period And I think that is the that is why I think SEBI did a very very good job for the mutual fund industry because otherwise between 2008 to 13 you saw the industry shrinking I think with such a nice product which SEBI has created I think we don’t need to worry about it. Would you rank this in a sense if you think about innovations in the mutual fund industry right SIP itself was a kind of innovation and today we are seeing the results. So would you rank this somewhere on that spectrum? Yeah, I don’t like the word innovation. I would say that anything that SEBI does which is in the interest of investors for the long term I think is a good development. Whether you call it innovation, is SIP an innovation, is SWP an innovation, is STP an innovation, all these we can discuss but I think all the steps that the SEBI does and this is one step which is actually going to help the investors navigate moderate return periods. Sure. Now Narin going to your own contrarian style would you say that you can express it better through an SI? Clearly yes because you know when we go and tell people that if you expect market returns of more than 20% peranom uh don’t invest in specialized investment funds is what we’ve been telling people. So automatically it means that the investor who comes in the fund is a person who doesn’t believe in very high returns in the market. So it becomes a bit easier. We have done the same thing actually with hybrid funds as well. But here we appeal to investors uh who can invest 10 lak rupees and have the same view. Whereas we we’ve been appealing to investors in hybrid funds also with this kind of a view and succeeded broadly. So I would say that’s how we look at it. Okay. And who would you say is the ideal investor for this fund? Actually I am of the opinion anyone who is willing to tolerate monthly volatility and is willing to think long term who can invest 10 lakh rupees and above is actually an investor in the scheme and at this point of time there could be many such people. So it the addressable market for such a product is actually large. But in terms of uh who should not be investing see I think people one person who should not be investing is people who believe in 20% peranom. The second person who should not invest is these are not capital protection funds. These are not fixed deposits. So people come into these products expecting fixed deposits and they find that it is not a fixed deposit. I think uh that is a very very important thing. So luckily you know we launched two products in the month of uh January end and March showed that it is not a fixed deposit. So I believe that uh people at both these ex extremes people who think it is fixed deposit and people who want very high returns both of them should be excluded in looking at this product. Sure. Now Narin uh you’re launching two new SIFS now. Um first of course is the asset allocator. If I could drill down a little bit into the strategy there because the way you’ve constructed it in a sense it’s a go anywhere kind of fund which is brilliant because with most other categories your leg room is restricted by by the category itself. So if you could give us an overview of the strategy in this particular S. See in 2022 when silver and gold were undervalued actually we were the one of the first people in the street to talk about multiasset and uh we were very happy when investors reciprocated. Today neither is gold or silver meaningfully undervalued. Maybe the near-term is still good maybe but it’s not undervalued. How do you look at valuation is by looking at nifty to gold or S&P 500 to gold S&P 500 to silver ratios etc to determine valuation because there’s nothing called interest rate dividend yield or anything in gold and silver. So when we come up with a product where there’s no mandatory investment in gold and silver and you don’t have to invest 65% in equity and you have better hedging strategies possible as per specialized investment fund guidelines. you are in a interesting product where you can actually what I call it for people who who are willing to trust ICSA credential AMC or buy it shut it forget it product. Absolutely that’s an important point that you are not constrained by regulations into having 10% allocation to commodities um and in that way perhaps it is superior to multiasset funds would you say? Exactly. So it’s a you see we are a big believer in unconstrained investing. You know I have a guru called James Montier. He says that if you do constrained investing and I’ we have seen it in the past technology in 2000 infrastructure in 2007 constrained investing doesn’t lead you to good long-term returns. So unconstrained is always the best. So there’s a product you know where you don’t need to invest 65% in equity. You don’t need to invest mandatorily in gold and silver. So you have a flex maximum flexibility. So anything which gives you maximum flexibility is always a good long-term uh investment choice for a person who is not expecting the moon. This is true. Um although just to talk about the components of this fund a little bit. So equity yes you can go below 65 but um I think you will keep it above 35 so that it retains a long-term capital gain after 2 years. You have a model there which is uh price to book value. Can you tell us more about how that determines your equity allocation? See we will be using the model but you know what we propose to do is you know this is a new product and you know we will look at the model and we will try to see whether the model has to be fine-tuned because finally the investor who comes into this product is not expecting equity style risk because if they wanted equity style risk there are so many products available so the investor who comes into this product wants lower risk so we will be trying to refine the model to try to have lower risk and not give a risk uh which is high and uh you know there is a learning here that we will try to incorporate to try to reduce the risk of this product at the same time obviously risk doesn’t come when you try to reduce the risk the return also sometimes comes down so people have to be prepared for that as well sure but just to emphasize you see book value as a more stable measure yes absolutely there we are big believers in book value being a much better measure than earnings than earnings because earnings fluctuate a lot. Uh we had this experience both in COVID and 20078. In 2007 earnings went through the roof. In 2008 it crashed. In 2020 earnings crashed but that was uh it was very easy to note that in 2021 it would improve but uh that’s why we have started to use book value in our balanced advantage fund model. But here we will try to use things aside from a model as well and try to run the fund with a moderate risk adjusted return concept. That’s what we intend to do and not just follow the model. Maybe two to three years from now when the fund becomes much bigger and we need to know how to run such a larger fund we may incorporate a model and communicate it. But right now we don’t want to be completely boxed into a model. Sure. I’ll just take one final point on this which is uh the other component that you have is corporate earnings to GDP. Yeah. Which now is at a multi-year high. So 5% typically has been a ceiling. Yeah. Do you see further room for it to grow? No. Actually we don’t see further room for it to grow. That is one of the reasons you know why we like specialized investment funds because we don’t think we are in a high return market at this point of time. We are in a more moderate return market and we don’t think there is a big room for it to grow unless something happens and India becomes a big beneficiary of artificial intelligence and that is not the current situation like what happened to Korea and Taiwan. If you look at Korea and Taiwan corporate earnings to GDP just shot up through the roof. Something like that were to happen to India and that is not today visible to us. If that were to happen then we will relook at our models at that point of time. Sure. On the commodity side Narin you’ve also got oil. It’s not just gold and silver. Um can you and this is through exchange traded derivatives. Yes. So what will be the strategy there? Actually we intend to use oil. We intend to use aluminium. We intend to use copper, gold, silver. We will use all the commodities which we can use in this fund because uh not just restrict ourselves to gold and silver and we may use any of these also given that the fund sizes are not going to be like what our multiasset fund is. We should be in a position to make use of it and over the years actually we have in our multiasset fund also tried investing in some of these exchange traded commodity derivatives. So we will be making use of it and our experience has been so far good but we won’t be able to invest large sums of money. So the fund again becomes large we won’t be able to make use of due to lack of liquidity in that due to lack of liquidity in them. But to an extent if there’s another oil shock like the current one you could use those derivatives to protect. Absolutely. And we have seen that you know for small amounts of money these extent traded commodity derivatives can actually give good returns and that we have seen it in both crude and we have seen it in aluminium and copper over the last 3 to four years based on our experience and actually internally my colleagues have been tracking it on a continuing basis over the last 3 to four years. Okay. A final question on this particular strategy. So the closest long only equivalent in your mind would that be bad? Yeah, it could be but you know we don’t like to call it like that. We would like to call it that this is an active asset allocator fund. Balanced advantage fund has never touched gold and silver and multiasset has mandatory investment in gold and silver. So you know this fits into what my guru says James Montier very unconstrained and has therefore that entire capability of buy it shut it forget it for the long term but you’ll have to trust ICA credential fund managers that they’ll handle the money well absolutely the reason I ask is because in our minds we always construct that risk return spectrum and as you increase equity then you expect higher returns and so you know we’re all attuned to thinking of categories that way. Yeah, that’s where you know somewhere we have seen over a period of time markets are volatile. So unless you manage to invest in a period like just after lemon or just after co equities is a volatile asset class also and these products like the specialized investment fund active asset allocator will make use of volatility and therefore try to give you a better risk adjusted return. The extra return that you get in pure equity is something we are willing to trade off when we launch these products. Okay. Can you tell us a little bit more about the derivative strategies that you’ll be using here and in your other scheme? Of course. See, actually we have learned a lot and we will continue to. What we have seen is that see we don’t intend to start with shorting at this point of time. This is not a permanent decision. But at this point of time, although the product itself would have the word short, we are not going to start off with shorting. Okay. The reason is very simple. Every day when we go home in the evening, we think what will happen in the evening to the war. Correct? And imagine you go home and you know that the complete war has be ended. What would I do that night? Me and all my colleagues in the civ team would not be able to sleep that night. True. So we have decided that till this entire global environment settles down, there is no point in using this word called short because it’ll only add to our stress, it’ll make us a 24 by7 wreck. Imagine spending every weekend thinking what is happening at this point of time in Iran war. So what we believe is that we don’t want to short. So we will make use of hedging strategies which would involve writing covered calls maybe writing puts against cash that we own in the fund things like that. We don’t intend to make use of naked shorts because we believe at this point of time that too with the current global environment we are not comfortable doing it. Is it a permanent decision? The answer is no. Is it a decision till we feel comfortable with the that the world is now that we can take an overnight position and go in shorting till that time and if we were to change our view would we use an appropriate method of communicating to the investor yes we have monthly calls we write about it maybe we’ll do something like and say we are now more comfortable doing it but at this point of time the answer is no fair your other scheme that you’re launching now which is equity long short can you tell us more about that see actually uh you know sebi has created these five categories in sift each of it has been thought through by sebi so these are very interesting categories so you know where you need to have 80% in equity and equity related instruments the hedging is which is available in the other products are also available here so what happens this becomes like a flexi cap equity category and at the same time again you can do riskadjusted return here because that uh Hedging facilities are available here. Again here we don’t intend to short at this point of time. So it becomes a category for a conservative flexiap investor and we believe a there are many conservative flexiap investors at this point of time in India. So we are looking to actually look for those kind of investors who want to invest in an equity fund but they are looking for a conservative experience. So again we believe it’s not for the persons who believe in 20% peranom markets for people who do again who this is not a capital protected fund this is much more equity like but again it’s people who think that these products are capital protected they are not capital protected yeah if I might push back a little bit on that because in a flexi cap you can have 65% equity here it is 80 uh so how would you isn’t that slightly riskier no actually if If you look at it, it is saying equity and equity related. So there are methods to ensure you have 65% in equity and the remaining 50 15% could be through hedging. Sure. And therefore it is not necessarily more aggressive than plexiap. Okay. I don’t think this will turn out to be a more aggressive product than pixap. Okay. Of course you also can put REITs into the equity, but I believe you’ll use that more aggressively in the Astra allocator than you would. Yes. And we need a much bigger REIT market. If you look at the quantum of money we manage in the quantum of REITs available and the way REIT valuations have gone up, REIT cannot be a very big part of asset allocation of any of our products. If it was, it would have you would have already seen it in our products. Yeah. And that is also true for init. That’s true. That’s also true for invit. And so at this point of time, they can’t be very big components. They can they be components? Yes. And that’s how it has been in all our funds as well at this point. So Narin, if you could sum it up, there has been a huge number of schemes and they keep growing and the complexity keeps growing in mutual fund industry. Um, and SIF is new and people have trouble understanding the product itself. So if you could just sum it up in a few lines, who is SIF for? What should people expect from SIFS? See SF is not meant for a person who looks at monthly NAVs. It’s meant for people who want to invest for the long term and it’s meant for people who understand risk adjusted returns and uh who understand that uh markets from here on are going to give moderate returns and uh you know unless you know you have a very bad event after which they can all function as pure equity as well many of the products. So, it is meant for a long-term investor who has been in the mutual fund industry in the past, who has seen some kind of both ups and downs in the market and who’s willing to invest for the long term and who looks at their NAVs every year on a rolling rolling basis. I think such people will find it more comfortable than people who look at their net asset value on a daily basis. Is it one of the best categories created by Sebi? It’s been a wonderful decision by Sebi and I think it is current in this environment in this environment where uh investors are unsure of where we are headed. I think the decision by Sebi to help us launch these products at this point of time is admirable and uh as a investment team we are excited at being able to work in specialized investment fund to give all the investors a very good risk adjusted return experience. I want to reiterate it is not a capital protected product and it is at the same time not a product for very high return expectation investors. At both ends, it is not recommended. But on the other hand, for people who like to invest for the long term and have been happy with the mutual fund industry, I think it’s a good product. Thank you so much. It was a pleasure speaking to you. Thank you.