Contra Funds and everything you have to know about them

By | 08/10/2018

Every individual is unique and so are his/her strengths, weaknesses, choices, risk appetites, financial goals, approach towards different things, etc. While most people follow the herd, this unique person doesn’t. Smart Financial Adviser Kuber Mindz likes to relate this in the investment scenario. Many people are regular investors who panic and sell when others are selling and buy when others are buying.

But there is a small segment of investors who invest in contrarian funds. Contrarian funds function opposite to the way most other funds usually function.

What is a Contrarian Fund?

A Contrarian Fund is a Fund with a distinct style of investment belonging to the equity category of mutual funds. They are given the name due to their contrarian style of investing and are called shortly as “Contra Funds”. Best financial adviser Kuber Mindz Moneymindz says that Contrarian Funds are known for investing in shares of ill-favored companies and stocks with the expectation that mis pricing of assets would take place then and more investors will be attracted.

So, a manager of a contra fund keeps stakes against unrestrained market trends by buying assets that under-perform or are devalued. In other words, the fund manager bets against the prevailing market movement by buying assets having the potential to grow in future but are hollow at the time.

Features of Contrarian Funds

  1. Take the less travelled path

Investing in Contra Funds means doing something different as Contra Funds invest in a different way.

  1. Risk taking ability

In the investment world, the mantra is “More risk, more returns”. Contrarian Funds take risk so as to offer good returns over the long term.

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Benefits of Contrarian Funds

  1. New Approach to investing

Investing in Contra Funds is like trying something new and investors need to invest in Contra Funds, with sufficient care.

  1. Adventure oriented

Contra Funds take risks and are adventurous in nature. They try to reach new avenues and do not typically follow other funds.

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