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Exit Magnum Contra

The fund has consistently underperformed & doesn't compare well to some of its peers…

I started Rs 1,000 for long term in Magnum Contra in April 2009. But after 2009 its growth rate is not looking good. Should I stay invested in this fund or invest in another fund through STP in this fund?
- S P Jaiswal

This is a multi cap fund that invests in undervalued scrips which are out of favour but have the potential to show attractive growth in long-term. Here lies the risk in finding such stocks to invest, which this fund has been finding tough to invest in. This fund was a good performer till a few years ago but has been going down in its performance for some time. The Value Research star rating is a good risk-adjusted measure to evaluate a fund and does not overnight change its ratings. A fund that continuously underperforms starts to lose the ratings and is an indication to consider exit as is the case with this fund. There are better performing funds in this category such as HDFC Equity and Quantum Long Term Equity that you can consider moving to. The lesson for you is to invest in funds with consistent returns with a proven track record and to regularly track its performance to stay invested or exit at the appropriate time.



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