Invesco India Contra Fund: Fund review

The increasing uncertainty over recovery in demand has been a key obstacle in spotting investment ideas in large number of sectors. This has also made the task of revising earnings estimates for companies difficult. In such times, it makes sense to follow the value investing approach, which aims at spotting value in a company by juxtaposing present valuation with historical valuation.

Identifying companies through this approach helps investors deal with the uncertainty about future earnings and current peak valuations of large number of well-placed companies.

Among schemes which follow value investing, investors can consider Invesco India Contra. One of the key features of the scheme is that it is well diversified in terms of market capitalisation. Close to 65 per cent of the portfolio is made up of large-sized companies, and 26 per cent mid-sized companies.


Interestingly, in comparison with its benchmark index (S&P BSE 500 index), the scheme’s fund managers Amit Ganatra and Taher Badshah have higher exposure to mid-sized companies than in large-sized companies. Given the theme of the scheme is value investing, midsized companies are likely to show higher growth than large-sized companies.

The scheme is the best performer among its peers. In the past three-year and five-year periods, the scheme has given 14.5 per cent and 14 per cent returns, respectively, while its peers have given 10.2 per cent and 10.5 per cent returns in the same periods, respectively.

Portfolio change (Past 6 months)

New entrants	Complete exits	Increase in allocation
Rail Vikas Nigam	L&T Finance Holdings	Coromandel International
NTPC	Karur Vysya Bank	Bharti Airtel
ONGC	Reliance Industries	National Aluminium Company

Returns (In %)

Period	CAGR return	SIP CAGR return	Equity Contra Fund -Avg CAGR return
1 Year	4.93	7.92	7.40
3 Year	14.51	11.16	15.36
5 Year	14.19	13.23	13.03

Returns peer comparison (In %)

Scheme name	1-Year	3-Year	5-Year
Kotak India EQ Contra Fund	6.85	14.49	11.22
L&T India Value Fund	3.69	11.48	13.80
Tata Equity PE Fund	-0.52	13.04	12.64

Source: Accord Fintech, Compiled by ETIG Database

Expert Take
Kaustubh Belapurkar, director, fund research, Morningstar India
The fund primarily invests into contrarian themes which leads it into the undervalued segment of the market. While the fund has a flexible approach, it has traditionally had a large-cap bias. Given the contra approach the fund could underperform over the short term but should add significant value over a market cycle in the long term.