SBI Contra Fund: Not consistent; look for better options

SBI Contra Fund is an equity oriented open ended fund with an aim to provide the investors maximum growth opportunity through equity investments in stocks of growth oriented sectors of the economy. There are five sub-funds dedicated to specific investment themes viz Information Technology, Pharmaceuticals,FMCG, Contrarian (investment in stocks currently out of favour) and Emerging Businesses.

Inception: July 1999 Assets under Management: Rs 2,028 crore at the end of September 2013 Fund manager: R Srinivasan Analysis • The fund seeks to invest in sectors that are out of favour in the equity markets. At the end of March 2012 the fund had the highest exposure to financial services with 24 percent of the portfolio in this area. Consumer goods, Pharma and automobiles were some of the other leading sectors.  ICICI Bank was the top individual holding with Dr Reddy’s Labs, Bajaj Holdings and Investments, SBI, Infosys and Exide were some of the other top holdings. The portfolio turnover was high at 1.5 times.  The BSE 100 index was the benchmark for the fund. The fund was an outperformer over the one year period but an underperformer over the three year one. • Six months later the fund witnessed a consolidation of holdings in the financial services space with IT, energy, Pharma and consumer goods being the other leading sectors. The fund had over 60 percent of its portfolio in large cap stocks with another 30 percent in mid cap stocks. ICICI Bank continued to be the top individual holding with SBI, Infosys, Bharti Airtel, BPCL, L&T and HCL Tech being some of the other leading ones.  The fund was an underperformer over the one and three year periods. • At the end of March 2013 financial services continued to dominate the sector charts. IT, consumer goods and energy were some of the other leading areas in the portfolio. ICICI Bank continued to be the leading holding with Infosys, SBI, Bharti, ITC, L&T, HDFC and Merck being the other leading stocks. The portfolio turnover ratio of the fund was around 0.85 and the fund now had around 55 percent of the portfolio in large cap stocks. The fund was an outperformer over the one year period but not the three year one. • The fund continued to repose its faith in the financial services sector and at the end of September 2013 the share of this area in the portfolio was at 20 percent.  IT, consumer goods and Pharma were some of the other areas with a significant share. The funds portfolio turnover ratio remained just below 0.8 times.  The predominance of large caps in the portfolio continued as the figure here was 66 percent as compared to 20 percent for the mid caps. Reliance Industries was now the top individual holding with Infosys, HDFC Bank, ICICI Bank, ITC, SBI and Merck being the other leading ones.  The fund was an underperformer over the one and three year time periods ended September 2013. • The fund is meant for a long term view stretching over several years but at the moment it has not been consistent in its outperformance so investors can look for better options for their investments.