Contra Mutual Funds: Hurry to Make High Returns

Introducing the Contra Mutual Funds

In the evolving financial landscape, enter Contra Mutual Funds to give a different outlook to your portfolio. These funds follow a unique investing style, which sets them apart from regular equity funds.

This post will analyze whether this category suits you or not. Let's begin the observations.

Before you do that, let's see how this category works.

How Do Contra Mutual Funds Work?

The following four easy steps explain how the Contra funds work:

1. Contrarian Strategy: Fund managers invest in shares that practically every other investor can see are bad but for probably a short-term issue or some bad news. They think that such stocks will rise when there is a change of heart over the market.
2. Market Inefficiencies: Contrary to funds focus on temporary price differences, buying shares of firms that traders believe are undervalued.
3. Long-Term Focus: These funds normally invest for a longer term (minimum five years) to give the portfolio stocks the time they need to bounce back and deliver on their full potential.
4. Diversified Portfolio:Like other types of funds, contra funds invest in bargains or neglected stocks but they spread the stocks over sectors to avoid major problems associated with certain securities.

Now that you understand its framework, let's see some strong reasons to take this fund under your portfolio.

Why Invest in the Best Contra Mutual Funds?

Here are some strong suggestions to include this category in your portfolio:

1. Market Conditions Favoring Recovery:Thus, it is quite logical to invest in contra funds because as the majority of macroeconomic indicators of India are still robust and the economy is also predicted to improve, it is now that numerous stocks might bounce.
2. Potential for Value Appreciation: As markets start attributing value to hitherto disregarded companies, investors laugh all the way to the bank, courtesy of steep market appreciation.
3. Diversification Strategy: This way, contra mutual funds can help improve diversification in your investment portfolio if most of your investments are tied to well-performing industries.
4. Long-Term Investment Horizon:So for those ready to invest long-term capital, contra funds can be a sexy strategy to get in on more market corrections and rebounds.

This brings us to the next question, What are the top Conra Funds to start SIP? Let's find your answers in the next heading.

5 Best Contra Mutual Funds for SIP in 2024

Here are the top 5 performing contra funds to invest in 2024.

1. Invesco India Contra Fund

• Fund Overview: The principle on which Invesco India Contra Fund works is the contrarian investment strategy of selecting stocks that have long-term prospects but may not be popular at the moment. This fund seeks to find out that there are companies that are not properly valued in the market to enable it to take advantage of mispriced assets.
• Why Invest: Recommended for long-term investment, this fund remains highly reliable for investors. It has pursued a rather unconventional strategy. It is suitable where the client is willing to take moderate to high risks and wants gains that are more than capital.

2. SBI Contra Fund

• Fund Overview: There is no doubt that the SBI Contra Fund is a pure play on the Contrarian concept, as the fund picks those sectors/stocks that may not be in favor now but might be in the future. The fund managers are interested in such opportunities that are in fundamentally sound organizations which are possibly overlooked for the time being.
• Why Invest: High risk/High return, this fund is perfect for the patient value investor who is willing to cater to sectors that are not very popular among the common investor. Because of its active management and robust research, SBI can be the investor’s best bet.

3. Kotak India Contra Fund

• Fund Overview:Kotak India Contra Fund targets those companies that are not popular among investors or analysts but could offer good/promising growth in the future. The fund operates by seeking situations whereby; the market realizes that the values may, in fact, be different.
• Why Invest: This fund is ideal for investors who have a contrarian long-term investment strategy so they can get huge returns when the market turns in their favor, as has been seen with some of their investment choices.

4. ICICI Prudential Contra Fund

• Fund Overview: The ICICI Prudential Contra Fund invests in assets that other fund managers do not like as they believe such stocks give great growth opportunities. The fund stresses current undervalued sectors and industries that have the potential to give a strong market performance in the future.
• Why Invest: Being one of India’s most prominent fund managers, ICICI also has a good performance when it comes to fund management and its disciplined approach towards value investing makes this contra mutual fund a recommended investment tool to create wealth using SIP.

5. Tata Contra Fund

• Fund Overview:Tata Contra Fund is a mutual fund that invests in stocks that are not in favor at any point in time by identifying the possibility of such stocks delivering good returns once the market does the same. They said the fund seeks to identify such stocks as are traded at low prices but are backed by sustainable business models.
• Why Invest: For the investors, who seek a higher growth rate through value investing Tata Contra Fund holds the edge through a professionally managed contrarian approach. However, it is appropriate for individuals who would wish to exploit market changes.

Final Words

To wrap up, it's a unique category with a lot of potential for high returns. If you are someone ready to take on a little risk and make something good out of it then these 5 Contra Funds discussed above are best. For a safety blanket, you can invest via SIP (systematic investment plan).