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Well, If you ask me, the answer would be "NO". I believe as a good investor, the next thing that comes up in your mind is - "Why?" If you did think of it, then kudos to you. If you did not, then my friend its time to fire up those brain cells. No matter, who gives any investment advise, it is not a good idea to believe without asking "Why?"
Reason 1: Underperformance
As you may have noticed in the paragraph on the performance of the Contra Funds, you can see that they have underperformed the Regular Equity Diversified Funds consistently over the past 5 years.
Reason 2: Shrinking Fund Corpus
When these Contra Funds were introduced almost a decade ago, they were selling like hot cakes. People invested in them heavily, but seeing their poor performance, most investors have sold their holdings in these funds. Some of these funds had AUM of over 1000 Crores but have come down significantly. The AUM as of November 2011 are:
a. UTI Contra fund - 165 Crores (Was nearly 1200 Crores in 2006)
b. ING Contra Fund - 8 Crores
c. Religare Contra Fund - 66 Crores
d. SBI Magnum Contra Fund - 2900 Crores
e. Kotak Contra fund - 61 Crores (Was nearly 350 Crores in 2006)
f. TATA Contra fund - 97 Crores (Was nearly 200 Crores in 2007)
g. L & T Contra fund - 8 Crores
Note: For the rest of the funds I could not find the historic AUM. But, based on the data for the rest of the funds, you can see that the AUM Corpus has shrunk significantly in these funds and suggests lesser investor confidence
Reason 3: Not much Contrarian Investment Approach
Bottom-line: The Stock Market is volatile and a contrarian investment approach may produce better returns. But, unfortunately the Contra funds available in the Indian MF Market right now are not so Contra and haven't performed well either. So, it is better to give them a pass and choose top performing Equity Diversified Mutual Funds that have outperformed other classes of MF's on a regular basis.
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∙ 12y ago
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