SBI Contra Fund vs Invesco India Contra Fund: Detailed 2025 Comparison & Insights

Introduction

The SBI Contra Fund and Invesco India Contra Fund are both categorized under equity mutual funds, adopting a unique investment approach known as a contrarian strategy. In this strategy, the fund managers identify and invest in stocks that are currently undervalued or underperforming in the market, yet show potential for long-term growth. This approach involves going against prevailing market trends by purchasing assets that other investors might currently overlook or undervalue.

 

The goal of a contrarian investment approach is to capitalize on these opportunities, assuming that once the market recognizes their true value, these assets will appreciate significantly. For investors trying to choose between these funds, understanding their individual performance and strategic differences is key. Below, we provide a comparison between the SBI Contra Fund and the Invesco India Contra Fund to help you make a more informed investment decision.

 

SBI Contra Fund Direct Plan-Growth

The SBI Contra Fund Direct Plan-Growth is an equity-focused mutual fund offered by SBI Mutual Fund, classified under the contra fund category. It invests in a mix of large-cap, mid-cap, and small-cap stocks, using a contrarian strategy to identify undervalued opportunities in the market. As an open-ended fund, it allows investors to buy or sell units at any time, though it carries a slightly higher expense ratio compared to other funds in its category. The fund’s objective is to achieve long-term capital growth by leveraging undervalued stocks that have the potential for future appreciation.

Key Features:

• Fund Age: 12 Years

• Fund Size: Rs. 46654 Cr

• Expense Ratio: 0.66%

• Minimum Investment: SIP Rs. 500 & Lumpsum Rs. 5,000

 

Invesco India Contra Fund

The Invesco India Contra Fund employs a contrarian investment strategy to achieve capital growth. It primarily focuses on equity and equity-linked instruments, targeting stocks that are undervalued across various industries. The fund's approach involves holding these stocks until the broader market recognizes their potential, allowing the stocks to gain value over time.

Key Features:

• Fund Age: 12 Years

• Fund Size: Rs. 18981 Cr

• Expense Ratio: 0.53%

• Minimum Investment: SIP Rs. 100 & Lumpsum Rs. 1,000

Comparison table for the SBI Contra Fund and Invesco India Contra Fund

Here’s a concise comparison table for the SBI Contra Fund and Invesco India Contra Fund:

 

This table provides a clear side-by-side comparison of the SBI Contra Fund and Invesco India Contra Fund, highlighting key features and performance metrics.

 

Comparing Performance Metrics

Historical Returns

 

Both funds have demonstrated solid performance, but the Invesco India Contra Fund has outperformed in the shorter time frames, indicating a strong recovery or growth phase. However, the SBI Contra Fund shows resilience over longer periods, suggesting its effectiveness in capitalizing on undervalued opportunities.

 

Risk Measures

 

The Sharpe Ratio and Sortino Ratio indicate that SBI Contra Fund delivers superior risk-adjusted returns compared to Invesco, making it a potentially safer choice for conservative investors.A lower Beta indicates that SBI tends to experience less volatility in its performance relative to market fluctuations, reflecting greater stability.

 

Portfolio Composition and Sector Exposure

Top Sectors

 

SBI's higher allocation to the financial sector (20.6%) indicates its strategy to capitalize on the growth potential within that domain, especially considering the recent economic recovery trends. Invesco's focus on healthcare aligns with the increasing demand for healthcare services, especially post-pandemic.

 

Top Holdings

 

Turnover Ratio

The turnover ratio plays a crucial role in determining a fund’s overall costs and tax implications. The SBI Contra Fund now reflects a turnover ratio of 39%, indicating a moderately active approach compared to a pure buy-and-hold strategy, while still being relatively efficient for long-term investors. On the other hand, the Invesco India Contra Fund shows a turnover ratio of 63%, highlighting a more frequent trading style. This higher activity may result in increased transaction costs and potentially greater tax liabilities for investors.

 

Cost Implications

Both funds have relatively low expense ratios (SBI: 0.66%, Invesco: 0.53%). However, the higher turnover ratio of Invesco could result in additional costs that are not immediately visible to investors. For those considering these funds, it is crucial to evaluate the overall cost structure to understand the net impact on returns.

 

Suitability for Different Investors

When deciding between these two funds, investors should consider their risk tolerance and investment horizon.

• SBI Contra Fund may appeal to conservative investors seeking long-term growth with less volatility. Its superior risk-adjusted performance metrics and lower turnover ratio make it a potentially safer option for risk-averse investors.

• Invesco India Contra Fund, with its higher recent returns and aggressive trading strategy, may attract investors willing to accept higher risks for potentially greater short-term gains. Its focus on sectors like healthcare may also appeal to those looking for exposure to industries expected to grow rapidly.

Conclusion and Recommendations

In summary, both the SBI Contra Fund and the Invesco India Contra Fund present unique advantages for investors adopting a contrarian investment strategy. While the Invesco fund has demonstrated higher returns in the short term, the SBI Contra Fund offers stability and lower volatility over time. Each fund has its own strengths and is suited for different investor profiles, emphasizing the importance of aligning your investment choices with your financial goals and risk tolerance.

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By understanding the nuances of these funds and leveraging the right tools, you can make informed decisions that pave the way for long-term financial success.

 

Frequently Asked Questions

1. What is the SBI Contra Fund?

The SBI Contra Fund is an equity mutual fund that invests in undervalued stocks with potential for future growth.

 

2. What is the Invesco India Contra Fund?

The Invesco India Contra Fund is an equity mutual fund focused on investing in undervalued stocks.

 

3. Is the Invesco India Contra Fund appropriate for conservative investors?

While the Invesco India Contra Fund offers potential for higher returns, its more aggressive strategy may not be suitable for conservative investors. Those willing to accept higher volatility and risk may find it appealing, especially with its focus on sectors like healthcare.

 

4. How has the Invesco India Contra Fund performed historically?

The Invesco India Contra Fund has shown impressive short-term performance, with a one-year return of about 50.15%. Its aggressive trading strategy may appeal to investors looking for quicker returns?.

 

5. Is the SBI Contra Fund suitable for all investors?

While the SBI Contra Fund is a good option for investors looking for long-term capital growth, it may be particularly appealing to conservative investors due to its lower volatility and risk-adjusted returns compared to other equity funds.

Disclaimer:  This blog is dedicated exclusively for educational purposes. Please note that the securities and investments mentioned here are provided for informative purposes only and should not be construed as recommendations. Kindly ensure thorough research prior to making any investment decisions. Participation in the securities market carries inherent risks, and it's important to carefully review all associated documents before committing to investments. Please be aware that the attainment of investment objectives is not guaranteed. It's important to note that the past performance of securities and instruments does not reliably predict future performance.