Introduction:
Considering investing in contra mutual funds for 2024? Contra funds are unique equity funds that go against the current market trends. They focus on assets that are underperforming or undervalued with the aim of achieving higher returns in the long run. However, it is important to note that contra funds come with inherent risks and may not perform well in the short term. Contra funds are suitable for people with a high-risk appetite. If you are seeking long-term returns and are prepared to weather market fluctuations, contra mutual funds could be an intriguing option for your investment portfolio in 2024. This guide can help you with some options you can consider.
Best contra mutual funds for 2024
1. SBI Contra Direct Plan-Growth
The SBI Contra Direct Plan-Growth is an investment option worth considering, with its diverse portfolio including holdings such as Reserve Bank of India (RBI), HDFC Bank, Gas Authority of India Ltd. (GAIL), Tata Steel Ltd, ICICI Bank Ltd, more. With an expense ratio of 0.66%, this fund aims to balance its investments across various sectors to achieve higher returns potentially. It is important to note that there is an exit load of 1% if redeemed within one year. As of February 20, 2024, the Assets Under Management (AUM) of the SBI Contra Direct Plan-Growth stand at ₹ 23,572.42 crore, with 87.9% invested in equities, 7.5% in debt, and 3.5% in cash.
2. Kotak India EQ Contra Fund – Direct-Growth
The second option you can consider is the Kotak India EQ Contra Fund - Direct Growth. With an expense ratio of 0.65% and a fund size of ₹ 2,450 crore, this fund offers potential for growth. Its holdings include HDFC Bank, Reliance Industries Limited (RIL), Infosys Limited, NTPC Limited, and Power Finance Corporation Limited (PFC). Managed by Shibani Kurian, the fund has an exit load of 0.5% if redeemed or switched out within 90 days from the date of allotment, but nil thereafter.
3. Invesco India Contra Fund – Direct-Growth
With a low expense ratio of 0.5% and a substantial fund size of ₹ 13,344 crore, the Invesco India Contra Fund - Direct Growth plan offers a strong investment option. Managed by Taher Badshah, the fund's holdings include ICICI Bank Limited, HDFC Bank Limited, Infosys Limited, NTPC Limited, and Larsen & Toubro Limited (L&T). There is no exit load if units are redeemed or switched out within one year from the date of allotment for up to 10% of allotted units, with a 1% charge for any excess redemption. After one year from the date of allotment, no exit load is applicable. The fund primarily invests 98.21% in equity, 1.66% in reverse repos, and 0.13% in net current assets/net receivables.
4. SBI Contra Fund Direct Plan IDCW Reinvestment
The last option on the list is the SBI Contra Fund Direct Plan IDCW (Reinvestment). With AUM totalling ₹ 23,572.42 crore and an expense ratio of 0.68%, this fund presents a substantial opportunity in 2024. Managed by Dinesh Balachandran, its top holdings include TREPS, TBILL-91D, HDFC Bank, GAIL (India), State Bank of India, and others. Be mindful of the exit load, which stands at 1% if you exit within one year from the date of allotment and nil if you exit after a year from the date of allotment.
5. Invesco India Contra Fund Direct Plan IDCW (Reinvestment / Reinvestment)
With AUM totalling ₹ 13,344.72 crore and an expense ratio of 0.5%, the Invesco India Contra Fund Direct Plan IDCW (Reinvestment/Reinvestment) provides a compelling investment option. Managed by Taher Badshah, the fund's portfolio includes investments in ICICI Bank Limited, HDFC Bank Limited, Infosys Limited, NTPC Limited, Larsen & Toubro Limited (L&T), and other companies.
Like many other mutual funds, this contra fund also has an exit load. You do not pay anything load if you redeem or switch out units within one year from the date of allotment for up to 10% of allotted units. However, there is a 1% charge for any excess redemption. After a year from the date of allotment, no exit load is applicable.
To sum it up
Choosing the right contra mutual funds for 2024 gives you a chance to invest in undervalued assets that could grow in the future. While contra funds come with inherent risks and may not perform well in the short term, they can be a valuable addition to a diversified investment portfolio for those with a high tolerance for risk. Be sure to pick the best contra funds that match your goals to make smart investment decisions to grow your money over time.
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