So which stocks did mutual funds favour the most? A look at the shareholding patterns of stocks comprising the BSE 500 throws up many interesting insights.

While there are exceptions, MFs were able to spot multi-baggers and add exposures in time.

For instance, stocks such as VST Industries, Fag Bearings, Hexaware Technologies and Strides Arcolab saw a drastic increase in MF holdings over the year. These stocks returned in the 53-127 per cent range during the period.

Similarly, some of the stocks that were dumped by MFs went on to post losses.

Stocks such as Graphite India, Rallis India, EID Parry, GNFC, Jagran Prakashan and Indian Hotels shed 11-25 per cent.

While banks, power and FMCG sectors make up the top three sectors in terms of allocation now, among the ones that saw the highest increase in allocation in the January-March 2012 period were FMCG, fertilisers and auto. In terms of stocks, United Spirits, Max India, Persistent Systems, Sadbhav Engineering and NIIT were among the ones that saw a significant rise in MF holding in the same period.

On the other hand, stocks such as Bilcare, Jyoti Structure, IDBI Bank, BHEL and Welspun Corp reported a drastic fall in MF holding during the same period.

Another interesting sidelight here is that within the mutual fund universe, it was the stock choices in a sector, investment strategies and styles that made all the difference. Funds that invested in MNC stocks or adopted a value-investing approach or dividend yield strategy were among the better performers. This is evident also in the good performance of funds based on these themes.

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