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Magnum Contra

Magnum Contra, an open-ended equity fund from SBI Mutual Fund, pursues a contrarian investment philo

Magnum Contra, an open-ended equity fund from SBI Mutual Fund, pursues a contrarian investment philosophy. Entry in to the fund is at a load of 1.5 per cent while exit is at NAV. Launched in June 1999, the fund has not paid any dividend to date. Magnum contra seeks investments in sectors that are currently out of favour but are likely to show attractive growth in the long term. This would also include turnaround stocks and companies with strong management but operating in commodities, which are bottoming out. While the fund has a specific investment objective, it however does not make it a sectoral fund, since the fund can simultaneously invest across stocks of several sectors. For, the stocks, which are currently out of favour, could be from any sector that qualifies as a 'value' investment. The fund started off with a concentrated portfolio and today, the top 15 stocks account for 77% of the portfolio. With the growth stocks heading the rally in the bourses, this contrarian fund has found value in economy-related stocks. The fund has been particularly over weight on automobile, metals and construction stocks, which account for 39 % of the portfolio. The portfolio also consists of certain PSU stocks such as BHEL and NALCO. However, the strategy so far has not borne fruits for the fund and it is trading below par. Since launch, the fund has given an annualised return of (-) 16.7 per cent. Value investing philosophy typically pays returns only in the long term and hence requires investors to be patient and stick with their investment if they expect any meaningful gains from the fund.