One of the most mentally draining but possibly lucrative stocks market methods is contrarian buying. You buy while everyone else sells in a panic. You sell when excitement pushes prices to unreasonable heights.
Since 1987, the SBI Contra Fund has created a superb name by following this strategy, and as of 2025, it has produced an astounding five-year CAGR of 30.52%.
Kotak mutual funds, on the other hand, provide a range of exposure to different market capitalizations and investment philosophies.
By properly allocating capital among these options, you may take advantage of market inefficiencies that most investors ignore and greatly increase the risk-adjusted returns on your portfolio.
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Decoding the Contrarian Advantage in SBI Contra Fund
The basic idea behind the SBI Contra Fund strategy goes against popular belief: equities may quickly lose fame due to market sentiment, sector rotation, or transient company problems that present chances for value rather than worsening fundamentals.
The fund, which has an AUM of more over ₹47,000 crore and is run by seasoned experts Dinesh Balachandran and Pradeep Kesavan, carefully finds these discounted chances across market capitalizations.
Strategic planning is shown by the current portfolio allocation: 51.78% of large-caps give security and liquidity, 14.59% of mid-caps capture growth potential, and 11.2% of small-caps promise explosive upside when market mood turns.
This well-rounded approach keeps exposure to contrarian possibilities throughout the market spectrum while lowering the concentration risk associated with pure value investing.
The fund’s investing approach mixes bottom-up stock selection with top-down sector allocation.
Fund managers use thorough basic analysis to separate firms with real structural issues from those facing transient difficulties after finding industries having transient headwinds, such as cyclical downturns, regulatory changes, or negative opinion.
Throughout several market cycles, the fund has steadily beaten its Nifty 500 benchmark thanks to its strict method.
Strategic Allocation: Timing and Position Sizing
When it comes to contrarian funds, most investors make the mistake of treating them like standard large-cap funds.
For good reason, the SBI Contra Fund is classed as “Very High Risk” since its holdings frequently perform badly during bull markets when momentum stocks are dominant, only to provide disproportionate gains when market mood changes.
Strategic position sizing and psychological resolve are important due to this instability.
Contrarian funds should make up no more than 15–20% of your whole stock portfolio, according to conservative allocation theories.
To achieve portfolio balance, mix the SBI Contra Fund with multi-cap or momentum-driven funds from the Kotak mutual fund family.
For example, mixing the 20% allocation of SBI Contra Fund with the 30% allocation of KotakMulticap Fund and the 20% allocation of Kotak Emerging Equity Fund offers contrarian exposure while keeping growth and diversity across trading types.
When using contrarian methods, discipline is more important than time. The best times to start a SIP for the SBI Contra Fund are frequently during market declines, which occur when NIFTY falls 10–15% from high.
The fund’s contrarian options become even more cheap during these times, paving the way for large profits when opinion returns.
Leveraging Kotak Mutual Fund for Complementary Exposure
With over 30 schemes handling over ₹5.66 lakh crore AUM, the Kotak mutual fund environment offers a range of choices to support contrarian positioning.
The KotakMulticap Fund offers fair exposure across big, mid, and small capitals without negative concentration risk, with an AUM of ₹15,725 crore and a three-year return of 22.65%.
Kotak Infrastructure and Economic Reform Fund targets businesses benefiting from India’s infrastructure growth for investors looking for industry diversification in addition to contrarian stock positioning; this thematic play supports SBI Contra Fund’s value-focused strategy.
When stock markets are volatile, asset class diversity offered by the Kotak Gold Fund and Kotak Multi Asset Allocator FOF Dynamic lowers overall portfolio volatility.
Tax-Efficient Harvesting and SIP Structuring
Equity mutual fund profits above ₹1.25 lakh are now taxed at 12.5% for ownership longer than a year and 20% for redemptions made within a year.
This makes it possible for contrarian and growth-oriented funds to carefully reap tax gains.
Regardless of market mood, arrange SIPs to support disciplined accumulation. By accumulating units at different prices that average out over time, a ₹10,000 monthly SIP split ₹4,000 into SBI Contra Fund and ₹6,000 into KotakMulticap Fund offers contrarian exposure with growth balance.
This is the core of rupee-cost averaging, which lowers the time risk inherent in contrarian tactics.
Portfolios built for long-term wealth compounding rather than short-term speculation are made by mixing patient contrarian stance through SBI Contra Fund with diverse growth through Kotak mutual fund products.
