Exiting a fund ?

This article is worth a read,

http://www.livemint.com/Money/rmrbriDOFeIM6MioiUr15M/Schemes-that-exited-Mint50.html

Looks like Axis Equity Fund and Axis Long Term Equity Fund were part of the exclusive club of the 50 curated (that's a nice word) funds and these erstwhile shining stars have now fallen from grace i.e. have become supernovas. Investors who used the Mint50 to narrow down funds and selected these two are now screwed, of course, they weren't as "diligent" as the ones who avoided these 2, but this case illustrates the difficultly of predicting the future path of a fund which inspite of all good intentions of the funds management is not a whole lot in their control, who knows these funds may start outperforming from now on!

Some gems from the article

To reduce the scheme’s volatility, the fund house has reduced AEF’s exposure to mid- and small-cap stocks. “Our strategy now is to have 75-80% of AEF’s corpus in large-cap companies and up to about 20% in mid- and small-sized companies,” said the fund official.

Lower volatility guarantees higher returns ?

We suggest that you stop systematic investment plans (SIPs) in these and exit once they complete the exit load (for AEF) and lock-in period (for ALTF).

That was a good to know.

I prefer to run the schemes keeping a benchmark index in mind. While I don’t hug the index, we shouldn’t veer so far from it that we take very active sector and company calls,” said the new fund manager and investors are going pay this closet indexer 2% to keep going.

Finally the futility of following these lists can be well understood through these extracts from
http://www.livemint.com/Money/Xm4PB3YH6ynE4CsrkWpzYN/Mint50-Shining-stars-from-the-mutual-fund-universe.html?li_source=LI&li_medium=news_rec

First the good news:

We checked out the past 5-year performances of the schemes that have been present in Mint50 before this year’s update. For short-term bonds, we checked their last year’s performance. Of the 50 schemes, five were passively managed. As their mandate is to mimic the stock market index, and not outperform it, we leave those out. Of the remaining, 76% of the schemes outperformed their category averages. There were 43 schemes in our basket that we could ascribe some commonly acceptable benchmark indices to. Of these schemes, 91% outperformed these benchmark indices.

But not good enough - we need to work harder.

This year’s changes are probably the biggest in recent years, on account of extended market volatility and changes in fund managers. 

How does the layman investor keep himself from getting jerked around by these lists. I recognize the authors of these articles have the best interests of investors in their hearts but could they educate investors like how people like John Bogle, Bill Bernstein did in the west ?