The funds objective is to invest in undervalued scrips, which could be out of favour at the time of investing, but may show attractive growth over long-term.
But, Magnum Contra has underperformed the category average in just 2 years out of the 10. Reason: It had transformed into a equity diversified fund sticking to consensus sectors.
The funds higher allocation to auto in 2007 and lower to financials is a case in point. Currently, it is betting on oil & marketing companies (OMCs) and petrochemicals because there is a lot of pessimism and under-ownership built due to concerns on the near-term outlook.
While underweight on information technology, this scheme is overweight on telecommunication and is more bullish on utilities, cement and hotels, as compared to it's peers.
What you will find here is a diversified, multi-cap portfolio with a cautious view on contra bets. Its impressive returns of 2004 and 2005 may no longer be replicated, but it's long-term track record is good.
