SBI Contra Fund Direct Growth

SBI Contra Direct Growth Fund is an equity mutual fund, launched on July 6, 2005. It invests a minimum of 65% of its assets in equity and equity-related instruments. The fund follows a ‘contrarian’ investment approach. This includes picking stocks that are temporarily out of favour. 

The fund is managed by Dinesh Balchandran, who has over 15 years of experience in fund management. The fund manager believes in buying low and holding stocks patiently until they give the right results. Apart from equities, the fund also allocates REITs, InvITs, debt and money market instruments to diversify.

Investment Strategy

SBI Contra Fund uses top-down sectoral allocation along with bottom-up stock picking. The fund manager identifies companies with strong business models and leadership. Stocks that may be under-researched and overlooked. This approach requires deep research and a long-term investment horizon.

Taxation on SBI Contra Fund

Being an equity-oriented mutual fund, taxation depends on the holding period. If you sell your investments within 12 months, they are considered Short-term Capital Gain. If you sell your investments after 12 months, it is considered Long-term Capital Gain. The taxes are as follows:

-Long-term Capital Gain Tax: 12.5% on gains above ₹1,25,000

-Short-term Capital Gain Tax: 20% on gains 

For example, say you sell your mutual fund investment within 12 months at a gain of ₹50,000. Your STCG tax on this would be:

Tax on STCG: ₹10,000 (₹50,000 X 20%)

Similarly, say you sold the same investment after 16 months at a gain of ₹1,40,000. Your LTCG tax after 1,25,000 exemption would have been:

Tax on LTCG: ₹1,875 (15000*12.5%) 

Who Should Invest In SBI Contra Fund?

SBI Contra Fund is suitable for investors who want to diversify with momentum-driven strategies. It aligns with investors who believe in long-term value investing and have a high-risk appetite. 

Allocation & Historical Returns

Currently, the fund's portfolio comprises 10.9% small-cap stocks, 51.92% large-cap stocks, and 11.84% mid-cap stocks.

With an AUM of ₹44069.0 crores, SBI Contra Fund Direct Growth generated a return of 10.0% in 1 year, 26.4% in 3 years, 37.3% in 5 years. while its benchmark index (Nifty 500) generated 10.0% in 1 year, 18.7% in 3 years, and 24.5% in 5 years.