When it comes to beating the market, often it is the mutual fund schemes which capture the limelight, while the star fund managers who work their magic stay in the background. That leaves the MF investor with a dilemma: When the fund manager packs up and moves to another company, should investors follow or stick around? How does one know who picks stocks best and who trails behind?

FE helps you out with India?s first-ever ranking of equity fund managers based on the risk-adjusted returns for the schemes they run, providing you with another key to making investment decisions. India?s top six equity fund managers, by this method, turn out to be Prashant Jain (HDFC MF), Apoorva Shah (DSP BlackRock MF), Sandeep Kothari (Fidelity), Kenneth Andrade (IDFC MF), Sailesh Raj Bhan (Reliance MF) and Chirag Setalvad (HDFC MF). These men managed close to R40,000 crore worth of equity assets, which is 23% of overall equity assets in the country.

What do the best fund managers say about their success? ?Long-term orientation captures the market cycle fully,? says Prashant Jain, chief investment officer of HDFC MF. His 20 years among bulls and bears have convinced him that the basic nature of equity market has not changed. Over the short term, the markets are always unpredictable. ?Don?t expect returns every year,? he warns.

Jain?s success mantra has three parts: buy only at reasonable valuations, select companies with good managements and stay put over the long term. Jain manages two funds and both have the highest rating of five stars as per Value Research.

For DSP BlackRock fund manager Apoorva Shah with a rating of 4.25 stars for four rated funds, it is unlearning the past and constant questioning of investment assumptions that help him stay sharp. ?Long bull runs are a thing of the past as market cycles are getting shorter,? he says. Investment decisions must take into account the existence of exchange-traded funds and hedge funds, which chase index stocks over the short term. ?Conviction and a disciplined approach to investing should give market-beating returns over the long haul, provided you are able to absorb short-term under-performance,? he says.

And going wrong is part of the game for financial journalist-turned-fund manager Kenneth Andrade of IDFC MF. ?With a strike rate of 55-65% over the economic cycle, I should be able to beat the market,? he says. His own strike rate has been 65% in the past, he says, pointing to outperformance. ?Businesses need not be reinvented. Rather, we look for the company with the right mindset which could grow faster than the industry to become tomorrow?s Bharti or Infosys,? he says.

Interestingly, two out of six fund managers ? Prashant Jain and Chirag Setalvad ? are from HDFC MF. Setalvad got an average rating of four stars for the schemes he managed. ?It’s a team approach, along with demonstrated individual talent that has made the difference for us,? said Milind Barve, managing director of HDFC MF. ?Setalvad is a talented young guy who is extremely articulate,? commented Jain.

Sandeep Kothari of Fidelity MF was travelling while FE tried to contact him, while Sailesh Raj Bhan of Reliance MF could not be contacted.

For ranking the fund managers, we culled data of fund ratings along with names of fund managers from Value Research, which looks at minimum track record of about 3-5 years to rate schemes.

Value Research ratings are made based on risk-adjusted returns of individual schemes for various equity fund categories.

This was further processed to shortlist only those fund managers who stayed at least five years with the current firm to ensure the fund performance is a direct result of their talent in stock-picking.

Additionally, only those fund managers who managed at least two schemes and with a reasonable size (upwards of Rs 1,000 crore) were taken to ensure the fund manager has the approval of the market. The short-listed candidates were then ranked based on average ratings of schemes managed by them.

At a recent mutual fund summit, Sebi chairman UK Sinha had proposed a ranking of the track record of fund managers.