Invesco India Contra Fund (G) fund review: Value-based buying goes a long way

MUMBAI: Market indices continue to touch life-time highs while corporate earnings are yet to catch up. In such a scenario, financial planners suggest investors stick to value strategies and invest in funds with a three-to-five year time frame. One scheme that has a value-oriented strategy is Invesco India Contra Fund.

Launched at the peak of the bull market in April 2007, it is a multicap fund with a value bias. The fund typically aims to identify companies trading below intrinsic value, are in a turnaround phase or have been de-rated due to a temporary change in sentiment. Typically, such strategies play out over a three-year period. The fund is fairly concentrated, even though it has a long tail, with the top 10 stocks accounting for 40-45% of the portfolio. Due to a contra strategy, at times in the short term, the fund may lag behind its peers. However, it has beaten its benchmark, the S&P BSE 500, over the 10-year period.

In the last three years, the fund has pruned exposure to midcaps and increased exposure to large caps -given the sharp run-up in valuations of midcaps. It currently has 61% of its portfolio in large-cap stocks.Stocks that have turned out to be winners for the fund over the last five years are HPCL, Britannia, MRF, Bharat Forge and Sun TV. Currently, the fund manager is playing contra in sectors like IT and telecom, where he believes value is coming in.