What is Contra Fund?

Investors choose different investment strategies based on their goals and risk appetite. One such strategy is investing in contra mutual funds, which follow a contrarian approach. These funds differ from traditional stock investments. Let us get a complete understanding of what is contra fund?’, a list of contra mutual funds, features of mutual funds, benefits of mutual funds, and more. 
 

List of Contra Mutual Funds in India 2025

Below table shows the list of contra mutual funds in India 2025:

Note: The above data is as of March 28, 2025.

What are Contra Mutual Funds? 

A contra mutual fund goes against the current market trends by buying stocks that are not performing well. With a contrarian approach, the fund manager invests in stocks that investors overlook even during high demand. Thus, the fund manager achieves capitalisation from fluctuations in asset values due to over-performance or under-performance.

How Does a Contra Mutual Fund Work? 

Here are a few of the pointers to understand the working of a contra mutual fund: 

• Fund managers conduct thorough research to find companies with strong fundamentals but are facing negative market sentiments. 
• Once the companies are identified, it then purchases these stocks at lower prices to capitalize on potential price recoveries.
• Fund managers follow a long-term strategy and hold the investments until they recognize actual value. 

Features of Contra Mutual Funds

Here are the features of contra mutual funds:

• Strategy: Contra Mutual Funds invest in undervalued stocks with future growth potential. 
• Risk-Reward: Contra Mutual Funds are high risk but can offer strong returns if stock recover.
• Volatility: Contra Mutual Funds are more volatile than traditional mutual funds.
• Long-Term Investment: Contra Mutual Funds is best for investors with more than a 5-year investment plan.  

How to invest in Contra Funds? 

Follow the below steps to invest in contra funds: 

• Step 1: Visit the mutual fund website/app.
• Step 2: Complete the registration process.
• Step 3: Select your preferred contra mutual fund.
• Step 4: Click on the ‘Invest’ option and select the amount.
• Step 5: Select SIP or lump sum investment.
• Step 6: Enter your KYC information

Why Should You Invest in a Contra Mutual Fund? 

Investing in a Contra Mutual Fund offers you various reasons, such as: 

• Returns: Investing in undervalued stocks can lead to high profits when they recover.
• Growth: Investing in contra mutual funds is ideal for long-term investors who are looking for hidden value. 
• Diversification: Investing in contra funds will help you balance your portfolio. 

Who should invest in Contra Mutual Funds? 

If you fall under the below category of investors, you can consider investing in contra mutual funds:

• Investors who want to reduce risk in an overvalued market. 
• Investors willing to stay invested until stocks reach their expected value. 
• Investors who want to invest for a long-term minimum of 5-7 years.

Taxation Rules of Contra Mutual Funds 

Contra mutual funds are taxed as mentioned below: 

Capital Gain Taxation 

Dividend Taxation