Top Contra Mutual Funds: Rs 1 lakh investment in top fund has given Rs 6.45 lakh in 10 years

Top Contra Mutual Funds: As the name suggests, contra funds are equity mutual funds with a contrarian view on the market. As per the Association of Mutual Funds in India's (AMFI) classification of mutual funds, the contra fund scheme follows a contrarian investment strategy with at least 65 per cent investment in equity stocks.

In these funds, a fund manager picks underperforming stocks and sectors at low prices.

The manager takes a contrarian view of investors who have shunned these stocks/sectors with the belief that they will recover in the future and, hence, will give high returns.  

Since these stocks are beaten down or defensive and have given negative returns in the recent past, picking these stocks for the contra fund always carries risk for the fund manager.

The primary risk is getting calls wrong as the fund manager's assessment to catch the trend in the future can fall flat. 

Because of those factors, the funds may underperform even in a bull market. 

But the higher the risk, the higher the return. Despite these factors, contra funds have a high risk-reward ratio as they invest in firms seeking to attain their full potential in the future. 

There are only three contra funds available for investors in India- Invesco India Contra, Kotak India EQ Contra, and SBI Contra Fund. 

All three funds have performed well over the years.

Here are their performances/returns in one, three, five, and 10 years. 

1-year contra fund performance

Kotak India EQ Contra Fund-35.50%
SBI Contra Fund- 34.94%
Invesco India Contra Fund- 34.94%

3-year contra fund performance

SBI Contra Fund- 31.02%
Kotak India EQ Contra Fund-25.54%
Invesco India Contra Fund- 22.10%

5-year contra fund performance

SBI Contra Fund- 27.62%
Kotak India EQ Contra Fund-22.59%
Invesco India Contra Fund- 21.03%

10-year contra fund performance

Invesco India Contra Fund- 20.48%
SBI Contra Fund- 19.61%
Kotak India EQ Contra Fund-18.99%

Contra fund performance since funds' inception

SBI Contra Fund- 14.76%
Kotak India EQ Contra Fund-14.47%
Invesco India Contra Fund- 13.05%

In this write-up, we will tell you about each of the funds and what Rs 100,000 investment has given in each fund in the 10-year period. 

Invesco India Contra Fund
Launched in April 2007, the fund tops the contra fund return category for 10 years with a 20.48 per cent return in the period. It has outperformed its benchmark, S&P BSE 500 Total Return Index, which has given a return of 16.14 per cent in the 10 years. The fund's assets under management (AUM) are Rs 14,502.53 crore,  while its net asset value (NAV) is Rs 130.8000 under its direct plan. Its expense ratio is 1.68 per cent against the category average of Rs 1.74 per cent. The fund has 96.52 per cent of its investments in domestic equities with 46.98 per cent of them in large caps. The fund has 72 stocks in its portfolio against the category average of 74.67. The main stocks in its portfolio are ICICI Bank, HDFC Bank, NTPC, and Infosys Ltd. A Rs 1 lakh lump sum investment in the fund has given a total of Rs 6,44,391.18 to an investor.

SBI Contra Fund
Launched on July 5, 1999, SBI Contra fund is the second-best performer in the 10-year period with a 19.61 per cent return. It has outperformed its benchmark, S&P BSE 500 Total Return Index, which has given 16.14 per cent returns in the same period. The fund has assets under management (AUM) of Rs 29,738.40 crore, while its net asset value (NAV) is worth Rs 376.8974 under its direct plan. The minimum lump sum investment in the fund is Rs 5,000, while in the SIP, it is Rs 500.
SBI Contra Fund invests a minimum of 65 per cent in stocks of companies. The fund has 3.55 per cent of its assets in cash, cash equivalents, and others. Dinesh Balachandran and Pradeep Kesavan are its fund managers. HDFC Bank, Gail (India), SBI, and Reliance India Limited are the main stocks in its portfolio. 
A Rs 1 lakh lump sum investment in the fund 10 years ago has given a total of Rs 5,99,342.26.

Kotak India EQ Contra Fund
The fund at No. 3 has given 18.99 per cent returns in the 10-year time frame. It has also beaten its benchmark, NIFTY 500 Total Return Index, which has grown by 16.01 per cent in the same period. The fund's AUM is Rs 2,982.16 crore, while its NAV stands at Rs 154.3170. The Kotak fund's expense ratio is 1.94 per cent against the category average of 1.74 per cent. Its 96.96 per cent investments are in domestic equities, of which 55.48 per cent are in large caps. The fund has 61 stocks in its portfolio against the category average of 74.67. ICICI Bank, HDFC Bank, RIL, and Infosys are the major stocks in its portfolio. A Rs one lakh investment in the fund has given Rs 5,68,990.02 in the 10 years.