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Mutual Fund Special: What are contra funds?

SI Reporter / Mumbai 19 Dec 11 | 09:16 AM

As the name suggests, these funds take a contrarian view on equities. The fund manager picks underperforming stocks or sectors, which are likely to perform well in the long run, at cheap valuations.


As the name suggests, these funds take a contrarian view on equities. The fund manager picks underperforming stocks or sectors, which are likely to perform well in the long run, at cheap valuations.

For instance, experts held a contrarian view on telecom stocks for a two-year period.
These funds are mostly a part of the equity-diversified category. The difference lies in the style of investing. For instance, a strengthening rupee strains the margins of IT companies as their major business comes from the US. But, a contra fund manager would pick IT stocks and wait for the rupee to weaken.


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Comments

    27 Mar 12 at 11:53 PM
By: Roy Hanson

The fund manager picks underperforming stocks or sectors, which are likely to perform well in the long run, at cheap valuations. -Tire Works



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