What are Contra Mutual Funds, who should invest in them?

Contra Mutual Funds

Contra Mutual Funds are equity mutual funds that do not invest according to market trends, but invest against it. Similarly, they invest in such stocks which are undervalued.

Anoop Parmar is an active investor (Investor) and Warren Buffett ,Warren Buffet, Are big fans of. You must be aware that Warren Buffett is an American investor and is the CEO of Berkshire Hathaway. They are considered to be upfront investors. an investor who (Share Market) Doesn’t follow the trend and runs in reverse. Anoop also agrees with the philosophy of Warren Buffett and he also wants to become a contrarian investor, that is, an investor who walks away from sheep. When he spoke to his financial advisor, he was told about Contra Mutual Funds (Contra Mutual Funds) came to know about. Financial Advisor told Anoop that Contra Mutual Funds are not right for every person. So let us tell you what are Contra Mutual Funds.

Contra Mutual Funds are equity mutual funds that do not invest according to market trends, but invest against it. Similarly, they invest in such stocks which are undervalued. Under this fund, the fund manager takes a contrasting view on a stock. He buys shares which are underperforming or underpriced at any point of time. There are times when some sectors do not perform well in many market conditions.

In such phases, fund managers invest in the stocks of these poor performing sectors and hold them till the demand for stocks in that sector increases.

What do experts say?

Why should Anoop invest in Contra Fund and why not? According to experts, investors who have a better understanding of the stock market and want higher returns than regular equity mutual funds can invest in such funds.

Yes, investors should also be prepared for huge losses on their investments. Even when the market is doing very well, they can still cause them huge losses.

Jujer Gabajiwala, director, Ventura Securities, says investors need to keep in mind that these funds may not perform well in the near future. Therefore, only such people should choose this fund who can invest for 5 years or more. Investors should also keep in mind the risk appetite of this fund, as every stock which is not performing well now may not necessarily perform well in future also.

Money9’s advice

Investing in Contra Funds and hoping for a miracle is not a good idea. You need to have a horizon of 5 to 7 years to get maximum benefit from Contra Funds. If you have limited time then you will be under pressure. Due to the high risk ratio, investors will have to use a systematic investment plan strategy for this.

(Story: Himali Patel)

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