Is SBI Contra Fund Good for 2025? A Detailed Review
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If you find yourselves asking this particular question, you must be wondering about the performance of the SBI Contra Fund to date. If yes, as per the recent data, it delivered 16.54% in 3 years and such rolling returns are quite impressive for a contra fund scheme.
This recalls a famous saying by Warren Buffet, "Be fearful when others are greedy and greedy when others are fearful." commenting on the contrarian philosophy that says market panics can be a great chance for low-priced investments.
In this blog, you will get a detailed review of the fund, including its recent performance analysis and the factors behind its success.
Let’s begin with an in-depth overview of this contra mutual fund.
SBI Contra Fund: Overview Analysis
Launched on 14th July, 1999, the SBI Contra Fund is managed by SBI Mutual Fund. It is largely an equity fund scheme. The SBI Mutual Fund’s investment objective is to provide its investors with potential opportunities to create wealth in the long term.
Recent Status
The fund is managed by an expert team of fund managers led by Mr. Dinesh Balachandran, who has been finding promising stocks for the SBI Contra Fund since 2018. Under his leadership, the AUM of SBI Contra Fund regular plan Growth grew from Rs.1,800 crores in 2018 to Rs.39,589 crores by March 2025.
Such impressive growth has been possible due to SBI Contra Fund Regular Growth unique contrarian investment strategy.
This raises another question, “What is a contrarian investing strategy?” Read the next heading to find out its answer.
Contrarian Investment Strategy of SBI Contra Fund
The contrarian investment strategy targets the stocks or sectors that are presently not performing so well but hold great potential to grow in the future. As the name suggests, this strategy is the opposite of investing in the stocks that are currently performing very well.
These undervalued sectors or stocks are usually ignored by the majority of investors but experts or experienced investors can identify them with great precision. That’s where the SBI Contra Fund regular growth is better than others.
Let’s proceed further in this SBI Contra Fund review and talk about SIP returns.
Amazing SIP Returns of 18% in Three Years
The SBI Contra Fund has generated 18.85% of returns in the 3-year Systematic Investment Plan (SIP). Not only this, the fund has given 24.72% SIP returns in 5 years. Such returns further showcase the potential of Contra Mutual Funds and the effectiveness of the contrarian investment strategy of the scheme.
You can refer graph below to compare the SIP returns of the SBI Contra Fund with the category average and the benchmark index.
As you can see, SBI Contra Fund outperformed both of its peers with significant margins. Now you must be convinced about the potential of the scheme. So start your investment journey with the SBI Contra Fund and create wealth for the future.
This contra fund scheme has been delivering unparalleled returns with more than 70% consistency. So let’s analyze its performance and assess how good it is.
Must Read: Best SIP Plans for 3 Years: Equity, Debt & Hybrid Category
Analyzing Rolling Returns of SBI Contra Fund
The below graph shows, how this contra fund performed using the rolling returns as the measuring parameter:
As compared to the benchmark index, that is NIFTY 500 TRI, the SBI Contra Fund has performed considerably well in the past few years. The SBI Contra Fund has generated rolling returns of 16.54% and 15.25% in 3 years and 5 years, respectively. The fund has also managed to deliver such huge returns with more than 60% consistency each time.
Considering the contrarian investment strategy, such performance is quite impressive. Despite investing in undervalued stocks, the SBI Contra Fund delivered great returns. And this indicates how well fund managers have executed their expertise.
Pro Tip: Cut down heavy calculations with the SIP Calculator short to seconds.
Besides analyzing the returns, there are certain other factors as well that can tell how good a mutual fund scheme is. Let’s understand them by starting with the sector allocation of the SBI Contra Fund.
Also Read: What is the Best Date for SIP? Everyone should know
SBI Contra Fund Sector Allocation
Sector allocation can tell how diverse a portfolio is, which helps investors assess the risk as well:
The largest share, 28.62%, of the SBI Contra Fund has been invested in the financial sector. And nearly 13% and 12% of the fund has been invested in energy & utilities and technology sectors, respectively. All three of these sectors hold strong potential in the future.
But since the fund uses a contrarian investment strategy, it means that these sectors might be undervalued currently. Reasons can be trade and tariff wars, geo-political tensions occurring between Israel and Hamas and other such regional conflicts, etc.
Anyway, SBI Contra Fund has also invested in materials (8.42%), healthcare (7.37%) and consumer discretionary (6.21%) as well. Such a vast diversity of portfolio indicates that SBI Mutual Fund has some talented people. Because identifying these sectors and speculating that they will deliver great returns in the future is not an easy task.
Asset Allocation of SBI Contra Fund
More than 85% of the contra mutual fund’s assets are allocated to equity funds. Hence it was earlier it was said that the SBI Contra Fund largely falls under the equity fund category. In addition, the reason is that equity funds hold the potential to provide greater returns. Moreover, the fund has also allocated assets in debt (7.49%) and cash and its equivalents (6.50%). Such an asset allocation showcases the SBI Mutual Fund’s conviction to provide investors with maximum returns.
Moving on, it is time to check whether this fund has quality that makes it worth your investment or not.
How Stock Quality Is Showing the SBI Contra Fund’s Conviction for Investors?
The earnings growth ratio of 14.25 shows that the underlying companies that the fund has invested in are growing at an impressive rate. Furthermore, the sales growth ratio and cash flow growth ratio are 9.85 and 7.11, respectively. Moreover, the P/E ratio for the scheme is 15.53. All these fundamental ratios indicate healthy growth of the SBI Contra Fund. This means that Mr. Balachandran holds efficient expertise in identifying undervalued yet promising stocks for the scheme.
You will find the fundamental ratios along with their values in the below table:
| Fundamental Ratios | Value |
|---|---|
| Sales Growth | 9.85 |
| Earning Growth | 14.25 |
| Cash Flow Growth | 7.11 |
| P/E Valuation | 15.53 |
This begs another question, “Will this amazing performance continue during market low?” The next section will give you the answer to that.
Why Are Contra Funds A Great Choice For Investment During A Market Low?
Contra funds are unique as they invest in stocks that are not performing well in the present but have the potential to grow at an exponential pace when the market surges.
Let’s understand how market conditions affect the growth of these Mutual Funds in detail:
Influence of Market Conditions on Contra Fund
There are various reasons due to which the market can face serious downturns. Such as the global pandemic that we faced a few years ago or geopolitical tensions between countries like Russia and Ukraine. During such uncertain times, some industries like pharmaceuticals, IT, metal, automotive, etc., can go through serious undervaluation.
Contra funds, like SBI Contra Fund regular plan growth, invest in such companies when they are undervalued with an assured speculation that they will grow in the future. When the market returns to normal conditions, these companies grow at a very fast pace thus giving substantial returns to investors.
Now that you have realized how contrarian funds can be a great choice during a low market, you can easily understand why the contrarian investment strategy of SBI Contra Fund is so unique.
Smart Investments, Bigger Returns
Who Should Invest in the SBI Contra Fund?
After going through SBI Contra Fund review, you must be interested in investing in the scheme. So, consider the following key points to decide whether the SBI Contra Fund is fit for you:
- The SBI Contra Fund is suitable for investors who have the vision to create wealth in the future.
- If you have an investment horizon of a minimum of 5 years or more, then the scheme is a good fit for you as the SBI Contra Fund has been giving amazing returns in the long term.
You can invest in the SBI Contra Fund through SIP or lump sum, depending on your financial health. Now, let’s wrap up our discussion with the final thoughts.
Time sure doesn’t wait, so why should you? Start SIP today for a better wealth tomorrow.
Final Thoughts
To sum up, based on the above discussion and the data regarding past performance, it can be said that the SBI Contra Fund regular growth can be a good scheme to invest in 2025.
This can be attributed to the expert fund managers and investors' trust, that have helped the fund grow this far. You can start a SIP as per your financial objectives and set a long-term goal so that you can have maximum benefits.
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