SBI Contra Fund is an equity fund suitable for investors who are seeking to invest in contrarian stocks apart from investments in IT, Pharmaceuticals, emerging businesses, etc. Contrarian stocks are the stocks which are currently out of favour in the market but are expected to offer maximum growth opportunities.
Going by the literary meaning, contrarian is an investment style that goes against the prevailing market trends. It works by investing in the purchase of poorly performing assets and then selling them off when they start performing well. Contrarian investors boost their stock value by figuring out which distressed stocks to buy and then selling them after the company recovers. This style lays emphasis on investing in out-of-favour securities having low P/E ratios.
Investment Objective: The fund seeks to invest in growth oriented sectors of the economy in order to offer a maximum growth opportunity to the investors.
Asset Allocation: Around 90% to 100% of the total assets would be invested in equities of a particular sector having a high-risk profile.
- Around 0% to 10% would be invested in money market instruments having a low-risk profile.
- The minimum and maximum limit for asset allocation in the investment pattern has been decided while keeping in mind the investment objective of the fund. This pattern may, however, be altered for defensive considerations if deemed necessary.
Benchmark: S&P BSE 100
About the benchmark
Fund Manager: Mr. Rama Iyer Srinivasan
About the Fund Manager: Mr. Iyer has over 23 years of experience in handling equities and has been managing SBI Contra Fund since past 6 years. Other than this he also manages, SBI Magnum Balanced Fund, SBI Magnum Global Fund, SBI Magnum Equity Fund, SBI Emerging Business Fund and SBI mid and small cap fund. Prior to this, he has worked with Future Capital Holdings, Principal PNB AMC and Imperial Investment Advisors.
Name of AMC: SBI Fund Management Pvt. Ltd.
Name of Trustee Company: SBI Mutual Fund Trustee Company Limited.
The investment policies of SBI Contra Fund comply with the rules and norms laid out by SEBI in 1996. According to the seventh schedule of the regulations, the following investment limits are applicable to the scheme:
- Not more than 10% of its NAV can be invested in debt instruments (money market and non-money market instruments) issued by a single issuer. This limit can, however, be increased to 12% of the NAV of the scheme, if a prior approval is from the board of directors of the AMC and the board of trustees is granted.
- Not more than 10% of its NAV can be invested in unrated instruments that have been issued by a single issuer. Also, the total investments in unrated debt instruments cannot go beyond 25%, and all such investments can only be made with the prior approval of Board of Trustees and Board of Directors of AMC.
- The investment restrictions on debentures are similar to that of debt instruments irrespective of their residual maturity period.
- The fund has to make sure that the total exposure in a particular sector cannot go beyond 25% of the net assets of the scheme. There are certain exceptions applicable to this rule which have been mentioned in detail in the scheme information document.
- The fund has to also make sure that the total exposure of debt schemes in a group cannot go beyond 20% of the net assets of the scheme. A group as defined in the SEBI regulations will include an entity, its holding company, its fellow subsidiaries and subsidiaries along with its associates.
- A particular fund cannot own 10% of any company’s paid up capital and have voting rights.
- A transfer of investments between schemes of the same mutual fund can only be allowed in the following cases:
- If the transfers are made on ‘spot basis’ for quoted securities at the prevailing market price.
- The investment objective of the scheme to which the transfer is being made should have confirmation for the securities transferred.
S&P BSE 100 is a broad-based index which uses the free- float methodology since 2004. The composition of the fund is very suitable and provides an appropriate basis for comparing the fund performance of the scheme. However, the trustee has the liberty to change the benchmark following any changes in the market conditions because of which a different index or indices may seem an appropriate comparison basis.
8. The scheme is not allowed to invest in:
- Any of the security of the group company of sponsor or associate that has not been listed
- Any of the security from group company of sponsor or associate issued through private placement
- Any of listed securities which are more than 25% of the net assets.
- The scheme is not allowed to advance a loan for any purpose whatsoever.
- The scheme cannot invest more than 10% of its NAV in equities and more than 5% of its NAV in equities that have not been listed.