Introducing SBI Contra Fund
Have you heard the phrase,” Think and Invest Different with SBI Contra Fund“? If yes, then let’s explore the scheme in detail by looking at its different perspectives. The scheme was launched by SBI Mutual Funds to invest in the inefficiency of the market.
The contra funds follow a contrarian investing approach. It is a dynamic approach that invests in funds that are undervalued or ignored in the market. But they have the potential to grow in the future and generate superior earnings.
The scheme was inaugurated on July 05, 1999. Moreover, the scheme aims to generate alpha capitalization by investing in undervalued companies. These companies are not trending in the market but grow in the future with high earnings.
The scheme has the flexibility of investing through distinct investment methods. Additionally, Mr. Dinesh Balachandran and Mr. Pradeep Kesavan manage the investment allocation. Under their guidance, the management team keeps a record of the market traits. Furthermore, they continuously keep searching for the ignored companies in the market. And these companies perform well in the future.
In addition, the scheme has a total AUM of Rs. 40512.1 Crore since its launch. The scheme has surpassed the benchmark NIFTY 500 value of 50 TRI. Moreover, the scheme is giving a very good return of 17. 43% since its launch.
Additionally, the scheme invests in diversified sectors of all market cap firms. Some of the top holdings of the scheme are HDFC Bank, Reliance Industries, Tech Mahindra, GAIL (India), Kotak, and others.
To elaborate on the scheme, let’s begin with the learning of features associated with it.
Is the SBI Contra Fund Good to Invest?
Now with the brief in mind about the scheme. In this section, you’ll get to know about the features related to the scheme.
· Long-term Investments
The scheme invests in the companies that the market undervalues. That implies the scheme invests opposite to the trend in the market. That means these companies will flourish in the future with a high return rate. Hence, this process takes time. The scheme will benefit you with a long-term investment of at least 5-7 years or longer.
· Fund Management
The SBI Contra Fund has an experienced team with knowledge of the market twists and turns. They allocate the funds to such companies that will grow in the future. They design plans according to the upcoming popular trends in the market.
· Variation in Investments
The scheme invests in diverse sectors of all market cap firms. Hence, with the upcoming trends, the firms will grow and show positive productivity. Investments in such companies of different sectors and market caps give you variations. Consequently, it gives your portfolio a 360-degree view by distributed investments.
· Investment Strategies
The scheme has the availability of investment methods that you can choose based on your requirements. The lump sum investment strategy takes a huge amount as a one-time investment. It takes the amount at once. On the other hand, a systematic investment plan takes the amount at regular intervals.
· High-Potential Growth
You have the saying, “Patience results in Growth”. The same is true here, the duration companies take to grow shows in the productivity of the scheme. Hence, this duration brings you patience to stay in the market and balance the economy during that time. Consequently, it makes your potential growth strong.
Everything has a good side and a contrasting side same is in the scheme. Let’s explore the flip side of the scheme.
How Risky is the SBI Contra Fund?
On the flip side, the scheme has some risks that you should consider while investing in the scheme.
· High Volatile
The scheme invests in companies that are out of favor with the market. The market and the scheme both are volatile. To illustrate this, in case the timing of the scheme’s investment doesn’t match with the market. It significantly affects the scheme’s productivity. Thus, the scheme’s lower productivity results in lowering your earnings.
· Expense Ratio
The SBI Contra Fund has investments in all market cap firms of distinct sectors. Hence, in case the investments are in small cap firms. Its liquidity challenge makes the expense ratio higher. Moreover, the research on these out-of-favor companies and also market trends charges high costs. Hence, these costs are reduced from your net earnings and make it lower.
· Fund Manager Dependability
The scheme is volatile and requires deep research on market trends. In case, the designed plans don’t work in favor and affect adversely to the performance of the scheme. Hence, it results in a fall in your net earnings.
· Short-term Fluctuations
The scheme takes long-term investments to benefit you with the consistency of good earnings. Short-term market fluctuations can impact the performance of the scheme. Thus, these fluctuations may affect your patience. Moreover, the result is also shown in your earnings.
Here is not the end, with the knowledge of the features and risks of the scheme. Now, let’s learn about the suitability criteria of the scheme.
Who can Invest in the SBI Contra Fund?
Here in this section, expand your knowledge about the scheme by learning about its suitability criteria.
· Long-term Growth Seekers
The scheme takes time to show its productivity based on market trends. If you have patience and experience with the market swings. Then the scheme will give you growth that lasts long and consistent earnings for a long time.
· Diversification Seekers
The scheme has investments in different sectors and all-sized market firms. If you wish to experience about distinct sector and benefit from all-sized firms. Then the scheme gives you exposure to invest and benefits from these firms.
· Regular Investors
The scheme has distinct investment methods that suit your profile. If you wish to make savings and have an average income source. Then the scheme gives you a benefit by investing in regular investments.
· High-Risk Tolerance
The scheme takes patience and time to grow and flourish in its returns. If you have an understanding of the market swings and can adjust your investments. Then the scheme benefits you with good earnings and helps you in managing your finances.
With this detailed discussion about the scheme. Let’s wrap up the scheme in the summary section.
Final Note
In short, the scheme follows the contrarian approach to investing in the market. That doesn’t mean the past performance of the firms indicates the future performance. The performance of the scheme depends on the future tendencies of the market. Along with many features, it also consists of inherent risks.
You are ready to shine differently in the market but want to reduce the risks. Then here you go with SIP investments.
These are the investments that have the uniqueness of reducing the risks. These investments have the flexibility to adjust according to your financial conditions. This makes your habit of saving and creates wealth over time.