Magnum Contra has consistently managed to stay ahead of the curve. The fund outperformed the category in every quarter since 2003. It emerged as the second and third best fund in 2004 and 2005 and was pretty impressive last year too. It has the third highest risk adjusted return in its category, i.e. for every unit of risk undertaken, the fund gives you more bang for your buck. When the market slips, it tends to fall much less than the category average as well.
But don't get misled by the name. When it was true to its calling, its stock picks and sector moves made it an awfully bold choice. But somewhere down the road it shed its contrarian image.
However, we don't see it as a sign that it has run out of gas. In all fairness, the contrarian instinct does surface now and then. The fund's moderate stance in technology and financial services, for instance. Or it's significant holding of metal stocks. Kudos to the fund manager for maintaining status quo on its auto holdings (Tata Motors and Maruti Udyog) when the tide turned against the sector after the first interest rate hike in December 2006.
The fund has struck a fine balance between riding on consensus sectors and taking contrarian bets. The end product is a blended portfolio of growth and value stocks.While still holding on to its multi-cap orientation, the portfolio has expanded from 31 odd scrips to 57. As long as the fund manager finds value in the stocks, he continues to hold them and does not resort to aggressive churning.
We continue to think that this is a topnotch pick.
This article was originally published on December 03, 2007.
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