Jun 20, 2024 63 min read

Invesco India Contra Fund: Beating the Markets with Its Contrarian Strategy

What exactly is Contrarian style? before diving in, it's essential to understand the concept because it sets the foundation for our discussion. So a contrarian style involves investing against current market trends and sentiments.

Now, turning your attention to the Invesco India Contra Fund it’s a popular mutual fund that uses a contrarian investment strategy, aiming to find hidden opportunities in the market. By investing in companies that are currently out of favor, the fund seeks to deliver strong long-term returns. Managed by MR. Taher Badshah and a skilled team using a flexible investment approach, the Invesco Contra Fund offers a unique strategy for investors looking to capitalize on market inefficiencies and achieve growth.

What Sets Apart Invesco Contra Fund's Investing Strategy?

Invesco India Contra Mutual Funds employs a contrarian strategy, focusing on fundamentally strong stocks in temporarily unpopular sectors. The fund managers select undervalued stocks with robust asset values and target sectors poised for growth potential. This approach aims to capitalize on early opportunities in overlooked areas, holding investments until their true value is recognized. The fund uses both top-down and bottom-up approaches to identify promising stocks across sectors, while also adjusting portfolio allocations to maximize return opportunities.

How Well Does Invesco Contra Fund Perform with Rolling Returns?

Launched on January 1, 2013. Invesco India Contra Fund went largely unnoticed for nearly a decade but not anymore because, its performance has now caught significant attention. The Invesco India Contra Fund consistently ranks at the top among diversified equity funds for long periods. It has shown impressive outperformance, beating its benchmark 18.51% and 16.71% over 3 and 5 years respectively, compared to the Nifty S&P BSE 500 TRI's returns of 13.96% and 14.11% over the same periods.

 Invesco Contra Fund Perform with Rolling Returns

How Has the Invesco Contra Fund Been Performing Recently?

Over the past 6 months, the Invesco Contra Fund has delivered an impressive 22.08% return, outperforming its Nifty50 TRI benchmark by 11.51 %. But that's just the beginning, now looking at the 1 Year horizon, the fund has truly shown off its strength, producing an amazing 46.93% return, which is 26.64% ahead of its benchmark. These results highlight the fund's strong performance, making it a standout choice for investors seeking solid returns.

 

Invesco Contra Fund Been Performing Recently

Interested in How Invesco Contra Fund Spreads Its Investments?

  • Portfolio Allocation

    The IICF fund allocates its investments to diversify risk and seize market opportunities, with 65.79% in large-cap, 24.23% in mid-cap, and 2.52% in small-cap companies. This strategy balances stability from large-cap stocks with the higher growth potential of mid cap and small-cap stocks, aiming to enhance overall returns while managing risk.



Portfolio Allocation

It's important to highlight the strategic portfolio adjustments made by fund managers in response to market conditions. They have recently reduced their exposure to sectors like autos and energy, possibly due to perceived challenges or lower growth prospects in those areas. At the same time, they've increased allocations in sectors such as capital goods, healthcare, and services. This shift shows their proactive position in reallocating investments to sectors they believe offer stronger potential returns in the upcoming market environment. By adjusting the portfolio in this manner, the fund aims to optimize performance and capitalize on emerging opportunities while managing risk effectively.

 

Invesco Contra Fund Sector Allocation

Stock and Quality

The fund manager of Invesco India Contra Fund uses a contrarian investment approach, focusing on companies that are currently out of favor but have growth potential. As of May 31, 2024, the fund holds 67 domestic stocks. The fund prefers companies in a turnaround phase, trading below their fundamental value, benefiting from a business upcycle, or growing at attractive valuations.

The fund's top five holdings are ICICI Bank, HDFC Bank, Reliance Industries, SBI, and Infosys. Over the past year, the fund's bets on PSU stocks like Bharat Electronics, SBI, NTPC, and Hindustan Aeronautics have yielded good returns. The fund's PE ratio is 17.48, slightly higher than the category average of 16.24, indicating a favorable valuation. On average, portfolio companies are experiencing 17.31% sales growth, 16.12% profitability, and a 21.84% increase in cash flow.

RatioValue
Sales Growth 15.77
Earning Growth 17.25
Cash Flow Growth 23.44
PE-Valuation 20.18

 

Overall, the Invesco India Contra Fund is distinguished by its focus on high-quality, fast-growing companies, making it a top choice for investors seeking long-term growth potential.

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Who Should Consider Investing in the Invesco Contra Fund?

Contra funds like the Invesco India Contra Fund are good options due to lower risks in downturns and better long-term returns. Managed by Taher Badshah, who has over 30 years of experience and has managed this fund for seven years, it has a strong history of profits     

In our view, the Invesco India Contra Fund is the best choice because it has consistently delivered good returns, and its portfolio is built using a contrarian approach that suits the current market. This fund is suitable for investors seeking a contra-style fund that offers diversification across market caps. Investing regularly in Invesco Contra Fund through SIP for 5-7 years to benefit from its strategy of buying undervalued stocks and potential long-term growth.

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