Are you looking for an investment opportunity in mutual funds that has a long-term potential for high returns? Consider SBI Contra Fund for investing, through a contrarian investment strategy.
This mutual fund stands as one of the top equity funds in India, which invests in undervalued but strong stocks. With an impressive five-year return of 32.81% and AUM of Rs 47,390 crore, this fund is for investors seeking aggressive long-term wealth creation.
In this article, you will explore the investment strategy followed by this fund, learn how to invest and get to know how well this mutual fund fits in your investment plan.
SBI Contra fund review
The SBI Contra Fund falls under the category of equity mutual funds that follows the contrarian strategy for investments. This mutual fund invests in underrated stocks that are currently unpopular in the market but carry a strong growth potential for the future. Hence, it aims to generate long-term capital appreciation.
As one of the largest and most appreciated contrarian mutual funds of India, the SBI Contra Fund has a NAV of Rs 422.55 for direct plan growth with an AUM of Rs 47,390 crore. This fund has an average annual return of 24.45% for 3 years and 32.81% for 5 years.
This contra fund has an expense ratio of 0.68% for direct plan and 1% exit load if redeemed within a year. This mutual fund also allows SIP with an investment amount as low as Rs 500 and lump-sum investment with Rs 5000. This fund mainly invests in large caps with 52.8% then in mid cap (11.2%) and small cap (11.6%). It also has 2.3% allocations in overseas equities.
What is the strategy of the SBI Contra Fund?
The SBI Contra Fund has a different approach to investing. It looks for stocks that are underrated and not getting much recognition from the market.
The goal of this fund is to invest in these unknown stocks in the belief that they will rebound over time while providing growth in the long term through investments in different sectors.
The main strategy followed by this mutual fund is to get good returns while also saving from losses. The historical performance by the fund has shown that it can do well during tough market conditions.
The Contra mutual fund includes multiple schemes of large, mid and small cap mutual funds, working to balance risk and potential returns, making it a good investment opportunity for investors wanting to find growth in the stock market.
How to invest in SBI Contra Fund?
Funding in the SBI Contra Fund can be a straightforward process. Go through the step-by-step guide given below to learn how to invest in this mutual fund:
Step 1: Clearly understand the goals, investment style and associated risks of the fund. Go through the past performance, expense ratio and other details to ensure that they meet your investment goals.
Step 2: For investing in mutual funds, you need to complete the KYC process, which includes:
- Fill out the KYC application form.
- Providing identity proof like an aadhar card.
- Giving the address proof, like bills.
- Submitting a passport-sized photo.
Step 3: You can invest in this mutual fund through two methods:
- Lump-sum Investment Plan: Investing a big amount of money in the fund at once.
- SIP Plan: Invest a fixed amount regularly, that is, monthly, quarterly, etc.
Step 4: Investment methods in the SBI Contra Fund include:
- Online Investment: Visit the official website & create an account. Select a fund & investment method that suits you, enter the amount and make the payment.
- Offline Investment: Visit a branch & get an application form, fill out the form & submit it along with the necessary documents and payment.
Step 5: Continuously monitor the performance of your investment & adjust your portfolio to ensure that it meets your investment goals. You can monitor the investment through the official website of the fund and other platforms.
Is SBI Contra Fund good for 2025?
The SBI Contra Fund can be a good investment choice in 2025, especially for investors who are looking for long-term wealth creation. Through the contrarian strategy, this mutual fund has shown good returns with 32.81% 5-year returns, outperforming category average returns of 24.42%. Its 3-year returns of 24.45% are also ahead of its peer group.
It has delivered CAGR (Compound Annual Growth Rate) of 16.71% over the long term (10 years), showing stable growth over time. This mutual fund also manages a large sum of assets (AUM), worth Rs 47,390 crore and maintains a diversified portfolio by investing in different mutual funds like large cap, mid cap and small cap.
The other benefits offered by the SBI Contra Fund are:
- High growth potential of undervalued stocks.
- Diversification of portfolio by investing in a mix of stocks.
- Expertise and experience of fund manager (Dinesh Balachandran).
- Highly suitable for investors who want long-term capitalization.
- Save tax through long-term capital gains (over 1-year investment).
- Invest in companies with strong fundamentals that perform well in harsh market conditions.
However, SBI Contra Fund is suited for investors who are willing to hold their investment for the long term and can handle equity volatility, as this mutual fund has a high level of associated risk. Contrarian strategies can underperform during certain market cycles, so patience is key.
What are the disadvantages of SBI contra fund?
The disadvantages of SBI Contra Fund include:
- Risk Category: It is categorized as "very high risk" according to SEBI guidelines, indicating that it may encounter high instability.
- Investment Timeline: To help lower risk and maintain consistent returns, it is a good idea to plan for at least three years when making investments.
- Past Performance: This fund has returned roughly 2.05% over the last year, 27.21% over the last three and 34.36% over the last five. These figures demonstrate its long-term growth potential, but bear in mind that there may be short-term fluctuations.
- Management: With a strong background in investment management, Dinesh Balachandran oversees the fund. Decisions made by the fund are heavily influenced by his background.
- Market Situation: The fund has been having difficulties by 2025, as evidenced by its 7.92% loss so far this year, which highlights the general effect of market trends on equity funds.
Conclusion
In short, the SBI Contra Fund is a great option for those who want to grow their money over a long duration. It contains a strong track record, a fusion of investments and a skilled and experienced management team, making it a good choice for those who can handle risks.
You can consider a regular investment approach, that is, a SIP for investing in this mutual fund. If you are after growth and can handle the risks, this fund might be a great opportunity for your investments.
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