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Lotus India Contra Fund

February 27th, 2007

The Lotus India Contra Fund fund is an open ended equity scheme whose investment objective is as follows:

The investment objective of the Scheme is to generate capital appreciation through investment in equity and equity related instruments. The Scheme will seek to generate capital appreciation through means of contrarian investing. However, there can be no assurance that the investment objective of the Scheme will be realised.

Contrarian investing involves picking ‘neglected stocks’ with strong asset values as well as focusing on high potential under owned sectors. The aim is to have a first mover advantage by investing into out of favour sectors/stocks thus increasing out-performance prospects. This can be done by monitoring stock/sector ownership and relating it to the fundamentals of the sector with an objective to get out of over-owned stocks and get into under-owned ones.

The scheme will invest upto 65-100% in Equity and Equity related instruments while 0-35% goes into Debt & Money Market instruments including securitized debts (excluding foreign securitized debt) upto 100% of the debt component.

The minimum application amount is Rs. 5,000/- per application & in multiples of Re.1/- for purchasing. Additional purchases can be made in Rs. 1,000 per application & in multiples of Re. 1. For redumptions, the minimum amount is Rs. 1,000/- or 100 units. Investments can be made through the SIP route as well. For this, the minimum amount of each installment shall be Rs. 1000 and in multiples of Rs. 100 in case of Monthly SIP and Rs. 1500 and in multiples of Rs. 100 in case of Quarterly SIP.

Load structure

The Entry Load for the scheme is 2.25 (where purchase amount is less than Rs. 5 Crores) and nil when purchase amount is equal to or greater than Rs. 5 Crores or in case of units are allotted upon reinvestment of Dividends or where the investor is a Fund of Funds, as defines under SEBI Regulations, 1996.

An exit load of 1.00% applies if units are redeemed on or before the expiry of 6 months from the date of allotment. A 0.6% exit load is applicable if redeemed after 6 months and on or before the expiry of 1 year from the date of allotment. There will be no exit load if redeemed after the expiry of 1year from the date of allotment or for redemption, where the initial purchase is equal to or greater than Rs. 5 Crores.

Tridib Pathak will be the fund manager for this scheme. BSE 500 is taken as the Benchmark Index.

Our take on Lotus India Contra Fund

Contrarian style of investments generally take long time and investors needs to be really patient, in some cases for few years, to get the real benifit. We suggest this scheme for those who can wait for long periods holding their investments. And for those who would like to be more cautious, the SIP route is suggested to take advantage of ruppee cost averaging. For this type of investors, money can be parked in in Lotus India’s Liquid Fund or Liquid Plus Fund and a systematic fund transfer can be made.

NAVs of select contra schemes

DBS Chola Contra Fund-Cumulative Option -  11.14
DBS Chola Contra Fund-Dividend Option -  11.14
Kotak Contra Scheme—Dividend -  14.365
Kotak Contra Scheme—Growth -  14.365
SBI MSFU CONTRA-DIVIDEND -  28.08
SBI MSFU CONTRA-GROWTH -  37.27
Tata Contra Fund -  Dividend -  11.1149
Tata Contra Fund -  Growth -  11.1187
UTI Contra Fund-Growth-Growth Option -  9.25
UTI Contra Fund-Income-Dividend Option -  9.25

Entry Filed under: Mutual Funds, Lotus India Mutual Fund, Contra Mutual Funds