After putting an impressive show in 2005, it delivered a pretty muted performance in 2006 and 2007. Even if the fund suffered temporarily, it stuck to good quality businesses, diversification and is wary of richly valued investments. In 2007, low exposure metals or construction and energy helped the fund.
This fund fell 50 per cent in 2008, marginally lower than the category average (54 per cent)without plunging into large caps or aggressive cash calls. It was fully invested when the market picked up in March 2009 returning 106 per cent.
The large corpus has resulted the fund get more diversified. With less than 20 stocks in the portfolio till 2003, it now holds 60. The top 10 holdings have averaged at around 40 per cent in past one year.
All in all, despite hitting the occasional road block, it's still one of the sturdiest shops around.
ICICI Prudential Dynamic
It reduces exposure to equities when the market is high and gets fully invested when valuations are low, as the risk-return trade-off is better and opportunity is greater. The fund can fully get into equity or liquidate the holdings to zero. Over the past few years, its equity holdings dropped to 76 per cent.
The fund has a defensive nature - underweight on domestic consumption, interest rate cyclicals. But, it bets on energy for being more conservative than commodities. The fund has tremendous flexibility, to shift between asset classes and market caps. It started as a large-cap fund, moved to mid-caps in 2003 and was back to large-caps in 2006.
Its performance has not always been impressive. But, over a 5-year period, this fund has a better potential to outperform than other funds.
The fund's 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 fund's 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.