This ones a winner. If compared with the benchmark, it has had just one annual underperformance (2003) in seven years. From a relative point of view, it began to beat the category average only from 2006, a result of Patil taking over the fund in November 2005.
In 2009, it delivered 90.45 per cent (category average, 80.3 per cent). Its performance has not gone unnoticed. As assets under management (AUM) swelled, the outcome has been a more diversified portfolio, with around 60 stocks (up from 35 in January 2009). Since 2008, apart from RIL, Bharti Airtel and Infosys Technologies, no stock has accounted for more than five per cent of the portfolio.
This fund attempts to target the same sector weights in its portfolio, as is found in its benchmark – BSE 200. But, that does not mean the fund manager is restricted to the benchmark universe. His individual stock selection is totally flexible and there is some flexibility in computing the sector weights; either plus or minus 25 per cent of the weight in the index or an absolute figure of plus or minus 3 per cent, whichever is higher.
While Patil broadly adheres to this strategy, there have been the occasional deviations, such as energy and engineering in 2006 and 2007. "We have always been positive on capital goods, specially power equipment companies. This sector will continue to grow and the outlook is bright," says Patil. But, due to stretched valuations, he was underweight on energy at that time.
Though Patil is positive on mid caps, he ensures this fund has a large cap thrust. Higher than average returns, lower risk and a well diversified portfolio make it a sound proposition.