In 2025, all four of Nitin Gosar’s equity funds at Bank of India Mutual Fund made it to the top quartile of their respective categories. That is not luck. Gosar joined the fund house in September 2022 after close to 12 years at Invesco, and has since built a research-driven process around a proprietary tool called the North Star strategy. Managing roughly Rs 2,800 crore across four funds, his flagship Bank of India Multi Cap has compounded at close to 24 per cent since launch against the multi-cap benchmark’s 18 per cent, and notably, nearly half that journey has been through a flat market.
In this conversation, he explains how the North Star works, what drove a sharp reversal in small-cap exposure in a single quarter and why sizing a position slowly is as important as picking the right stock.
How do you adapt as the market evolves? Take the Multi Cap Fund. It has lived through two quite different markets. The first 18 months were a broad rally, and since September 2024 we’ve been in a flat-to-falling market for close to two years. Has that changed how you invest, or only what you own?
As the name suggests, it’s a multi-cap fund. Typically, while creating the portfolio, especially in a multi-cap fund, you need to keep in mind the essence of large-cap, mid-cap and small-cap stocks.
Large-cap, we believe, is here to do a consolidation kind of activity, while mid- and small-cap are here to provide alpha-creation opportunities.
While identifying names in mid- and small-cap, we clearly keep in mind what the scenario is on a bottom-up basis and which ideas are coming through our research team. Thereafter, we put them through the badging process, where we clearly differentiate which companies our analyst team likes based on growth parameters and which companies are there because of value parameters.
Then we have an overlay of where the macro cycle is. If the macro cycle indicates that interest rates or volatility are too high, then probably you want to stick with the safer names. If the broader environment is suggesting otherwise, then you have a differentiated approach.
Having said that, while preparing the multi-cap portfolio, we also have a North Star strategy, which is more proprietary to us. It’s an in-house strategy where we evaluate large-cap valuation versus mid-cap and mid-cap valuation versus small-cap.
On those relative scales, every valuation parameter gives you a story or an indicative judgement about what you can pursue going forward. We have been following it to the principle, and so far you will see that within the portfolio there has been constant change over a period of a quarter or two, where large-cap exposure would have oscillated or decelerated. That’s the programme, or the outcome, of the North Star strategy that we have devised.
Let’s get into the North Star framework. For viewers, can you de-jargonise it? Why is it called North Star, what goes in and what comes out? Does it produce a number? For example, one particular engineering and construction major has been part of your portfolio every month since launch, though below its earlier peak now. How did the framework get you into that position