{"id":36469,"date":"2025-03-10T21:12:28","date_gmt":"2025-03-10T15:42:28","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=36469"},"modified":"2025-03-10T21:12:28","modified_gmt":"2025-03-10T15:42:28","slug":"what-are-contra-funds-top-contra-funds-in-india","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/what-are-contra-funds-top-contra-funds-in-india\/","title":{"rendered":"What are Contra Funds? Top Contra Funds in India"},"content":{"rendered":"

As an investor, if you are looking to diversify your portfolio, if you have moderate experience and a willingness to take calculated risks, then contra funds can be a valuable addition to your portfolio.\u00a0<\/span><\/p>\n

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\"Start<\/a><\/b><\/h4>\n

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Let us explore what contra funds are, why they might be a good investment, and their risk-return profile.<\/span><\/p>\n

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What are Contra Funds?<\/b><\/h2>\n

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Contra funds are equity mutual funds that follow a contrarian investment strategy. Fund managers invest in stocks that are undervalued or out of favor with the market but have strong potential for future growth. The assumption is that these stocks will recover and generate significant returns over time. This strategy is backed by thorough research and analysis of market cycles, economic conditions, and business fundamentals.<\/span><\/p>\n

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According to the Association of Mutual Funds in India (AMFI), contra funds fall under the Equity Mutual Fund category and must maintain at least 65% of their portfolio in equities and equity-related instruments.<\/span><\/p>\n

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Why Invest in Contra Funds?<\/b><\/h2>\n

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Investing in contra funds can be beneficial for several reasons:<\/span><\/p>\n

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1. Long-Term Growth Potential<\/b><\/h4>\n

Since contra funds invest in undervalued stocks, they offer the potential for strong gains when the market corrects itself.<\/span><\/p>\n

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2. Diversification<\/b><\/h4>\n

These funds invest across sectors, reducing sector-specific risks.<\/span><\/p>\n

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3. Market Inefficiency Advantage<\/b><\/h4>\n

Contra funds take advantage of market inefficiencies where stocks are mispriced due to temporary negative sentiments.<\/span><\/p>\n

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4. Professional Management<\/b><\/h4>\n

The fund managers employ deep research and historical trends to identify potential turnaround stocks.<\/span><\/p>\n

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Top Contra Funds in India<\/b><\/h2>\n

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Below is a comparative analysis of some of the top-performing contra funds based on their <\/span>1-year and 3-year returns<\/b>, <\/span>Total Expense Ratio (TER)<\/b>, and <\/span>Asset Management Company (AMC):<\/b><\/p>\n

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Contra Funds with 1-year and 3-year Returns<\/strong><\/h3>\n

 <\/p>\n\n\n\n\n\t\n\n\t\n\t\n\t
Sr. No.<\/th>Fund<\/th>1-Yr Return<\/th>3-Yr Return<\/th>TER<\/th>AMC<\/th>\n<\/tr>\n<\/thead>\n
1<\/td>Invesco India Contra Growth Direct Plan<\/td>10.45%<\/td>19.33%<\/td>0.56%<\/td>Invesco Mutual Fund<\/td>\n<\/tr>\n
2<\/td>SBI Contra Growth Direct Plan<\/td>4.31%<\/td>24.11%<\/td>0.60%<\/td>SBI Mutual Fund<\/td>\n<\/tr>\n
3<\/td>Kotak India EQ Contra Growth Direct Plan<\/td>3.37%<\/td>19.85%<\/td>0.60%<\/td>Kotak Mahindra Mutual Fund<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n

Source: Kuvera, Feb 26, 2025.<\/span><\/i><\/p>\n

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Risks and Returns Profile<\/b><\/h2>\n

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While contra funds offer significant upside potential, they come with their own set of risks. Let us explore the risk and return profile of the contra funds.<\/span><\/p>\n

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Return Potential of Contra Funds<\/b><\/h3>\n

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Contra funds follow a value-investing approach, meaning they seek out stocks that are currently undervalued or out of favor but have strong long-term growth potential. Based on the provided table, the return profile of contra funds varies depending on the investment horizon:<\/span><\/p>\n

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1. Short-Term Returns (1-Year Performance)<\/b><\/h4>\n