Let me start today’s article with one question that often creates strong opinions.

Who is the best batsman in the current Indian cricket team?

Usually, this is the question that starts debates on social media and among friends.But I will use this to explain an important idea.

So, coming back to the question, some people might say Virat Kohli because he has a strong record and has shown consistency for many years. Others might say Rohit Sharma because he has scored big hundreds and has the ability to change a match on his own.

There will also be many who support young players like Shubman Gill, Yashasvi Jaiswal, or Ruturaj Gaikwad because they have shown great talent and look very promising for the future.

But realise one thing, when people give these answers, they usually look at runs, averages, or recent big scores to decide who is the best. But those who follow cricket very closely will tell you that numbers alone do not show the complete picture.

They look at how a player performs on tough pitches, how he faces strong bowlers, and how he stays calm under pressure. They also look at technique, mindset, and how a player adapts in different formats like Tests, ODIs, and T20 matches.

The point I want to make here is that there is no single correct answer. One player might look better to you, and another might look better to me.

Different people use different ways to judge.

The same idea works when we look at mutual fund managers. Many people, including some experienced investors, think that returns are the only thing that matter. They say that returns are the best measure because that is how wealth grows.

Of course, returns are important. But think about what happened in 2021. Many smallcap funds in India showed returns above sixty or seventy percent. Was this only because the fund manager had great skill? Not really. It also happened because the market was going up strongly and most stocks were rising together. In such cases, it is very difficult to tell if the returns came from true skill or from luck.

That is why I feel it is important to look at more factors.

We should see the type of stocks a manager picks, how much conviction he shows, how he manages risk, and how often he changes the portfolio. Choosing a fund manager only by looking at returns is like picking a batsman only because he scored the most runs in one season, without seeing how he performed in tough matches or difficult conditions.

There is much more to a good fund manager than just high returns. That is what I want to explain today, and this article will help you understand what really matters when choosing a fund manager you can trust for the long term.

When I judge a fund manager, I first look at how often they change stocks in the portfolio. This datapoint, which is widely available for every fund, is called the churn or turnover ratio. A manager with high churn usually chases short-term trends and tries to time the market. This often leads to higher risk and higher costs inside the fund.

Take , which has a churn rate of around 10 to 15 per cent. The fund holds stocks like HDFC, Bajaj Holdings, and even global names like Alphabet for many years. Over the last five years, this fund delivered about 27 per cent annual returns with lower volatility. The patient approach has helped it protect capital during tough market phases. (Note: the churn in this fund is actually even lower, if you adjust for the impact of its arbitrage portfolio.)

Figure 1: PPFAS Flexi Cap Fund Turnover Ratio: Jun 2025 vs Jan 2025. Source: PPFAS Factsheet

Another example is , which has maintained a churn rate below 20 per cent for many years. The fund manager focuses on steady, large-cap companies and avoids frequent changes. Over the last five years, it delivered around a 24 per cent annualised return, with smoother performance and better downside protection compared to many aggressive peers.

On the other hand, the Quant Small Cap Fund has shown a churn rate above 100 per cent in some years. In 2021, it delivered a return of over 70 per cent, but in 2022, it fell sharply and exhibited significant fluctuations, making it a risky investment for long-term investors.

A low churn approach is like a test batsman who builds a careful innings. Over time, patience and conviction usually lead to stronger, more stable results.

Another important factor I look at is whether a fund manager builds a unique and thoughtful portfolio or simply fills it with well-known large-cap/index stocks to look safe.

Many mutual funds hold common names like HDFC Bank, Reliance Industries, ICICI Bank, and Infosys in large weights. These stocks are strong businesses, but many managers include them mainly to stay close to the benchmark index and avoid criticism if they underperform.

This style is called

A good fund manager should not just copy the index. Instead, they should show the courage to build a portfolio based on deep research and conviction. When a manager selects companies that are not in every other fund, it shows independent thinking and a strong investment philosophy.

A good example of a fund with a different and thoughtful approach is the . If you look at its portfolio as of June 2025, the top holdings include Coforge, Persistent Systems, Polycab, Trent, Kalyan Jewellers, Dixon Technologies, and CG Power.

These are strong businesses but are not the usual heavyweights that dominate most large-cap funds. For example, Coforge alone has a weight of 11.3 per cent, Persistent Systems at 9.6 per cent, and Polycab at 9.4 per cent.

This shows that the fund manager is willing to back high-conviction ideas and focus on future growth leaders instead of just sticking to index favourites for safety. The fund’s returns also reflect this about 22.47 per cent CAGR over five years and strong outperformance versus the benchmark.

A manager who builds such a unique portfolio is like a batsman who plays his own natural game and adapts creatively to different bowlers and conditions. This independent thinking can create strong, differentiated returns over the long term.

If you are looking at return, then it is fine. But then you should also look at the to understand the full picture.

In simple terms, the Sharpe Ratio tells you how much extra return a fund has given for each unit of risk it has taken. It is not just about how much return a manager made, but how smoothly and carefully they made it.

A high Sharpe Ratio means the manager has delivered good returns without taking wild or unnecessary risks.

For example, once had a Sharpe Ratio close to 2 (see Figure 1). This was a very strong number and showed that the fund was giving high returns with very controlled risk.

At that time, the fund’s global stocks like Alphabet and Meta performed strongly, and its Indian picks did well too. Also, market volatility was lower during those years, which helped push the Sharpe Ratio higher.

Now, this fund’s Sharpe Ratio has come down to around 1.

Many people might worry seeing this change, but this does not mean the fund manager has lost skill. Instead, it shows that market conditions have changed. Global technology stocks faced corrections, and some of the value picks in India needed more time to perform. Also, volatility in both Indian and global markets increased, which naturally reduces the Sharpe Ratio.

Looking at Motilal Oswal schemes, the currently has a Sharpe Ratio of around 1.5, and the has a Sharpe Ratio around 1.7.

These are very strong numbers. Why do they have such high Sharpe Ratios? In my opinion, it is mainly because these funds focused on concentrated, high-conviction portfolios in strong growth sectors like IT, industrial manufacturing, and electrical equipment. Their stock picks like Coforge, Persistent Systems, Trent, Polycab, and Dixon Technologies have delivered strong returns, while volatility has been managed well.

However, a very high Sharpe Ratio should not always be taken as a permanent sign of superior skill. Sometimes, certain sectors or stocks perform very strongly for a period, which pushes up the ratio. The real test is whether the manager can keep risk-adjusted returns strong across market cycles, not just during bull phases.

A Sharpe Ratio around 1 is still a good sign. It shows that the manager is protecting capital and focusing on steady, disciplined growth rather than chasing quick, risky gains. In my view, this proves that the fund is sticking to its process even when conditions are not easy.

This is exactly what I look for, and that is the ability to deliver returns while keeping risk under control over long periods.

When I judge a fund manager, I never stop at just looking at returns. Returns show what happened in the past, but they do not tell me how those returns were achieved or whether they can be repeated in the future.

I start by looking at the . A low churn means the manager has patience and conviction. It shows that they believe in their stock picks and allow time for the companies to grow, instead of chasing every short-term market movement.

Next, I focus on whether the manager builds a or simply copies the benchmark. A manager who avoids filling the portfolio with common large-cap names is showing actual research and independent thinking.

Finally, I look at , such as the Sharpe Ratio. A high Sharpe Ratio indicates that the manager is not just taking blind risks but is generating strong returns while controlling volatility. While a Sharpe Ratio above 1 is good, some funds, have recently shown Sharpe Ratios above 1.5, highlighting disciplined yet high-conviction strategies.

This approach helps you choose a manager who acts with skill and discipline, not just luck or momentum and builds real, lasting wealth across different market cycles.

Before I sign off, I want to say this honestly. There are many ways to judge a fund manager’s performance, and you should explore them and see what matches your comfort and belief.

In the end, it is your money, and you need to decide who you trust with it.

Just like in cricket, a batsman is not judged only by one big score. We respect the players who show solid technique, handle pressure, and perform across different conditions and formats. The ones who stand tall even when the pitch is difficult earn true respect over time.

It is the same with fund managers. High returns in one year may look impressive, but real skill shows up when markets get tough, when patience is tested, and when decisions are guided by discipline rather than noise.

Whether it is Virat Kohli building an innings or a fund manager building your wealth, the real value lies in consistency, strong basics, and the ability to adapt and stay calm under pressure.

In the end, pick a manager who you believe can play the long game for you. That is what matters the most.

Note: This article relies on data from fund reports, index history, and public disclosures. We have used our own assumptions for analysis and illustrations.

The purpose of this article is to share insights, data points, and thought-provoking perspectives on investing. It is investment advice. If you wish to act on any investment idea, you are strongly advised to consult a qualified advisor. This article is strictly for educational purposes. The views expressed are personal and do not reflect those of my current or past employers.

Parth Parikh has over a decade of experience in finance and research. He currently heads growth and content strategy at Finsire, where he works on investor education initiatives and products like Loan Against Mutual Funds (LAMF) and financial data solutions for banks and fintechs.