But the public scrutiny and criticism that the institution went through in recent months and the painful choices that it faced including liquidation of a large part of the fund to pay off fleeing unit-holders has forced it to change for the better. The institution has shown some rare aggression in churning its portfolio. Underperforming stocks were simply jettisoned without hesitation and performing ones were added. The common feature of the stocks added tothe portfolio were their high price-earning multiples; obviously the fund had its eye on a quick rehabilitation of its NAV. This meant that solid but low multiple stocks even those such as ICICI were also dumped.

There are lessons to be learnt from this episode. First that accountability to unit-holders is a very good thing. And second, that competition within mutual funds is the ultimate deciding factor for the returns that investors enjoy. If the investor did not have alternative options (in performing mutual funds) to invest in, US-64 would have had little or no incentive to change its approach. And lastly the public sector managers should be encouraged to perform in line with their private sector counterparts, by being suitably and adequately rewarded.