An investment can be considered in Magnum Contra. The fund's strategy of
going against the market has delivered a return of about 9 per cent over the
past year. While its performance beats the category average, it may not
appear as impressive as some of the top ranking funds. There are, however,
few funds that have built a track record of beating the market through
contrarian investing in the manner this fund has. Moreover, such strategies
typically take longer periods to pay off and require investors to take a
long-term view. Magnum Contra has witnessed more volatility over the past
year. During this period, stocks that were not in market favour cane under
further pressure during corrective phases. For those who used systematic
investment plans to build their exposure to the fund, however, the returns
are likely to have been far superior.

Assuming a monthly investment of Rs 1,000 was made beginning end of April
2006, investors would have earned a return of 22 per cent (excluding
interest earned from money in the bank)! The fund's performance also appears
to have picked up pace over the past 6 months.

As heightened volatility is expected to be the norm in the markets
henceforth, investing in phases or through SIPs may be an appropriate
strategy for more conservative investors. Magnum Contra has demonstrated an
ability to compensate investors for risk. Its monthly returns over the past
five years have outpaced that of the BSE 200 two-thirds of the time. We
compare its performance to the BSE 200 as it captures some of the action in
the mid-cap space.

The fund was heavily biased towards mid-caps until 2005, after which it
shifted to large-cap stocks. Since then, it has also toned down its
aggressive exposures to stocks and capped investments in any single stock to
about 5 per cent. Such measures do not appear to have affected performance.

*Portfolio overview*: In terms of sector exposure, Magnum Contra resembles
that of several other diversified funds with engineering stocks figuring in
its top holdings. Most of the funds that figure in the top of the
performance charts now sport a tilt towards energy stocks, which again form
a chunk of its holdings.

However, software stocks, which have propped up the returns of most
diversified funds, are conspicuous in their absence from the portfolio. This
could explain some of its underperformance