Investing in these turbulent markets can be challenging for most retail investors. Among the various styles of investing, contrarian calls can be rewarding over the long term only if the stock picks that seem undervalued currently actually break out subsequently when markets discover their potential.
In this regard, Invesco India Contra Fund can be a good addition to investors’ portfolios. With a track record of over 15 years, the scheme has delivered above average returns and has been consistent in outperforming its benchmark.
The fund’s approach is mildly contrarian, but it does take a different approach in terms of weightages to sectors vis-à-vis the benchmark, bets on out-of-favour sectors at times and generally maintains the portfolio’s valuation multiple at specific levels.
Invesco Contra can be considered for the core portion of your portfolio, if you have the appetite for medium risks. The systematic investment plan (SIP) route can be taken with a horizon of 7-10 years for taking exposure to the fund.
The fund’s performance has been fairly consistent across timelines. If we take the rolling one-year returns of Invesco Contra and that of its benchmark – BSE 500 TRI – over the last 10 years, the fund has beaten the index nearly 73 per cent of the times. When three-year rolling returns are taken over 2013-23, the fund outperforms its benchmark over 98 per cent of the times.
On a rolling five-year basis over the past 10 years, the fund has delivered an average return of 17.3 per cent, making it one the best across equity categories.
An SIP in the fund of ₹10,000 every month over the past 10 years would have delivered a corpus of ₹29.35 lakh. This amount is equivalent to an annualised return of 17.04 per cent.
Periodic investments in Invesco Contra have been quite rewarding for investors.
When the investing style of the fund is examined, it seems to be following a blend of value and growth styles. Banking has always been the top sector held by the fund across timelines, though exposures wax and wane based on individual stock picks.
The weightages to other sectors are generally in single digits, making the portfolio quite diffused without concentration.
Invesco Contra spotted winners in software and pharma early in 2020 and the rally in those segments was rewarding for the fund. It trimmed exposure in late-2021, when stocks in these sectors started correcting. But in recent months these once again figure among the top few holdings of the fund. The fund also managed to up stakes in autos in January 2022 itself.
Invesco Contra follows a multi-cap approach to investing. Usually, 60-70 per cent of the portfolio is in large-caps. Mid- and small-cap holdings can be sizeable. The fund also remains almost fully invested across market cycles, with cash position rarely going beyond 3 per cent.
The value style is apparent from the way the fund portfolio’s price-earning multiple moves over time. Invesco Contra’s portfolio PE multiple generally stays in the 21-22 range across periods of market gyrations.
The scheme’s top holdings are from the Nifty pack, in line with the fund’s large-cap tilt, though diversification emerges lower down in the portfolio.
Given the fund’s consistent performance and steady portfolio moves, Invesco Contra can be a key addition to your portfolio.