SIP investment in Contra funds
Typically, investors or mutual fund managers look for stocks that have performed considerably well in recent years. However, in Contra funds, the fund managers take an unpopular approach; they invest in stocks that have not performed well in the short term in the stock markets. These funds tend to buy stocks at low prices for the current period, with the expectation that stocks will generate good returns in the future. At that point, the stock price will be high and generate good returns for the mutual fund and SIPs. Investors with a strong appetite for risk generally opt for these funds. However, the SIP Contra fund mentioned below has been rated 5 stars by reputable research firm Crisil and has performed well among peer funds.
Contra SBI Fund – Direct Plan
The SBI Contra Fund – Direct Plan generated a return of 21.14% (absolute) in the last year, a return of 66.90% in the last 2 years, a return of 78.92% in the last year Past 3 years and a return of 86.18% over the past 5 years. The annualized return of this SIP matching fund was 58.07% in the last 2 years, 41.58% in the last 3 years and 25.1% in the last 5 years.
The assets under management (AUM) of this fund is Rs. 3,338.74 crore, and the expense ratio is 1.41%. However, the category’s average expense ratio is 0.98%, which means that other funds have, on average, a lower ROE than this fund. The net asset value or unit price of the SBI Contra Fund was Rs. 218.52 as of January 7, 2022.
If you sell the fund after 1 year of investing, long-term capital gains tax will be imposed.
SBI Contra Fund – Portfolio
The SBI Contra Fund – Direct Plan holds a position of 84.85% in equities, 4.74% in foreign equities and 11.66% in other sectors. The top 5 holdings of this fund are Tube Investments Of India Ltd. (automotive auxiliaries), ICICI Bank, HCL Technologies, MTAR Technologies Ltd. (defense) and Reliance Industries Ltd. (refineries / marketing). The SBI Contra Fund invests in a total of 67 stocks. Among them, large-cap investments are 31.3%, mid-cap investments are 9.55%, small-cap investments are 30.79%, 17.95% in others. The banking, automotive auxiliary, pharmaceutical, IT and real estate sectors remain at the top of the fund’s investment portfolio.
In this pair there are also funds like Kotak India EQ Contra Fund – Direct Plan and Invesco India Contra Fund – Direct Plan, which an investor can check. Crisil awarded 3 stars to the Kotak India fund and awarded 2 stars to the Invesco India fund.
(Also Read: Top 3 Mutual Fund SIPs in ELSS Category (Tax Savings), 4 Stars Per Value Research)
Investing in stocks / SIPs presents a risk of financial losses. Investors should therefore exercise caution. Greynium Information Technologies, and the author, are not responsible for any losses caused as a result of decisions based on the article.