scorecardresearchSBI Contra Fund Direct Plan-Growth investors earn 255.98% returns since its inception

SBI Contra Fund Direct Plan-Growth investors earn 255.98% returns since its inception

Updated: 05 Apr 2022, 05:04 PM IST
TL;DR.

Investing in this contra fund lends you the benefit of investing in stocks at comparatively cheap prices.

Making money via Contra Funds is a very specialised investment strategy. 

Making money via Contra Funds is a very specialised investment strategy. 

Contra funds are those that invest in stocks which are currently not performing well. 

Simply put, the fund manager takes a contrarian view of the stock. Hence, Contra funds. These funds are more about value-based investing wherein the fund managers look for stocks available at lower prices than their intrinsic value. The fund management team performs a series of permutations and combinations to assess the true worth of that stock before deciding whether to park money in it or not.

Like most other mutual funds operating in the securities market, investors must stay invested in it for at least five years to earn good results. Besides, they must invest only through the systematic investment plan (SIP) route to benefit from the averaging method. Once in a while, the market assumes a bearish shape. Investing through SIPs done regularly helps reduce the average cost of holding a stock bit by bit.

An interesting fund example is the SBI Contra Fund – Direct Plan Growth which is best suited for investors who prefer to take selective bets on stocks that yield higher returns compared to their peers.

Article
Let’s take a look at the difference between ETFs vs. Stocks vs. Mutual Funds.

SBI Contra Fund Direct Plan-Growth 

Launched on July 14, 1999, the current assets under management (AUM) amount to 3,773,39 crores. The risk factor is average in this open-ended fund with the return grade being categorised as “Above Average”. This explains the growing number of investments in this fund as returns exceed the fund’s inherent risk over a period. 

The fund is benchmarked against the S&P BSE 500 TRI and can be bought to earn long-term returns. This fund charges an expense ratio of 1.33 per cent, which is a bit higher compared to other funds in this category. 

The minimum amount you can invest in this fund is 5000 in a lump sum while you can make an added minimum investment of 1000 in a lump sum in this fund. The minimum investment you can make through SIPs is 500. The exit load is 1.00 per cent of the sale value if the fund is redeemed before a year. 

Asset allocation

Roughly 73.05 per cent of the fund’s holdings are in Indian equity stocks and 3.80 per cent in foreign equities, thus, making up 76.85 per cent of the fund’s total investment in equity funds. Debt constitutes only 2.64 per cent of the fund’s investments while the remaining 20.51 per cent of the fund is invested in alternate investment options. 

Currently, the total number of stocks in this fund is 65 out of which 30.03 per cent are large-cap investments, 8.53 per cent are mid-cap investments, 23.55 per cent constitutes small-cap investments while the remaining equity holdings amount to 14.74 per cent of the total capital money invested. 

The returns factor

The scheme has earned more than 29.74 per cent returns in a year while the absolute returns over five years are 106.77 per cent. Since its inception, the absolute returns on this fund have been 255.98 per cent. 

Tax treatment

If the units of this fund are redeemed within a year of investment, the gains from this fund are subject to short-term capital gain tax (STCG), i.e., 15 per cent.

Long-term investors redeeming their investments after one year will be exempted from tax on gains up to 1 lakh. More than 1 lakh gains would be subject to long-term capital gains tax, i.e., 10 per cent. There is no cess or surcharge on the funds sold before or after one year. 

Disclaimer: Mutual funds are subject to market risks. Please read the offer document carefully before investing. Also, the Securities and Exchange Board of India has stipulated the latest guidelines categorising this fund under the “Very High Risk” category. 

First Published: 05 Apr 2022, 12:06 PM IST