In its first year, the fund failed to beat either the category average or its benchmark. For the next two years, it remained a category underperformer. It began to impress only after Mahesh Patil took over towards the end of 2005.
2006 saw the fund emerge as a top quartile performer and in 2007, it comfortably beat the category average. In the market downturn in 2008, it fell less than the category average in all the quarters. In the first quarter of 2009 also, it succeeded in curtailing its losses to 1.17 per cent while the category shed (-) 2.95 per cent.
When Patil took over, he exited a number of stocks and a number of new additions were made to the portfolio, including some debutants.
But the most apparent change brought about was the level of diversification. In the past, there were ample instances of the topmost stock cornering more than 9 per cent of the portfolio as well as a number of occasions where the stocks in the portfolio hovered at around 20. Under him, the holdings became more diversified and the number of stocks too rose. Its portfolio is now well diversified with 56 stocks (June 2009).
The fund manager has been pretty good with his sector allocations. In 2007, his bets on engineering and financial services paid off. In 2008, as well as the first five months of 2009, it was the energy and financial services sectors that got bulk allocation. It has also been taking exposures to derivatives from May 2008.
In the recent market rally (09/03/2009-30/06/2009) too, the fund has been able to match its category, gaining 71.35 per cent.
A well diversified portfolio tilted towards large-cap stocks with decent long-term returns makes the fund a stable offering.