The reason is simple, these funds invest in stocks that are under-performing for various reasons. While investment is all about patience, investing in Contra Mutual Funds requires a little more patience from investors. It is important to note here that these funds tend to perform better over the long-term and are not ideal for short-term investments.Ĭlick here for Best Contra Mutual Funds Who should invest in Contra Mutual Funds?
A contra fund invests in stocks of companies from these sectors and holds on to them till the demand increases. There can be times when certain sectors witness a slump due to the prevalent market conditions. The fund manager of a Contra Mutual Fund purchases stocks at a value lower than its expected value in the long-term. The core belief is that any exorbitant price of an asset will eventually normalize in the long-term once the existing triggers are mitigated. Both over-performance and under-performance lead to a distorted value of the asset which the fund manager tries to capitalize on.
The fund manager takes a contrarian view of the stock when it is shunned by the investors and also when there is a superlative demand for the same. What are Contra Mutual Funds?Ī Contra Mutual Fund invests against the existing market trends and purchases stocks which are not performing well currently. Here, we will explore Contra Mutual Funds which follow the contrarian style of investing and talk about some essential factors that you need to know about these funds. While the risks are high, this style of investing offers the investors an opportunity to earn superlative returns. Of these, the contrarian style of investing interests many investors. Fund managers of mutual funds adopt different investing styles to achieve the investment objective of the scheme.
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