Bandhan Mutual Fund has announced the launch of its new Bandhan Contra Fund, an open-ended equity mutual fund based on a contrarian investment strategy.
The fund aims to invest in fundamentally strong companies whose stock prices are currently undervalued by the market.
The New Fund Offer (NFO) will open on August 10 and remain available for subscription until August 24.
What is a Contra Fund?
A contra fund follows a strategy of investing in companies that are currently out of favor with the market.
These stocks may be trading at lower prices due to factors like weak sector performance, temporary business challenges, or negative market sentiment.
The idea is to identify companies with strong long-term potential before the market recognizes their value. If the company’s fundamentals improve over time, its share price may also recover, giving investors better returns.
Why Experts See an Opportunity
According to Bandhan Mutual Fund, the current valuation gap across different sectors has created attractive opportunities for contrarian investing.
Vishal Kapoor, CEO of the AMC, said that adding a contra fund can complement traditional growth and value-oriented equity portfolios by investing in overlooked opportunities.
Experts believe this strategy is more suitable for investors with a long-term investment horizon, as it may take time for undervalued stocks to recover.
What Returns Can Investors Expect?
Historically, contra funds have delivered average long-term returns of around 14% to 18%, although returns are never guaranteed.
For example, SBI Contra Fund has generated annualized returns in the 15% to 18% range since its launch. However, experts advise investors not to make investment decisions based only on past performance.
Things to Know Before Investing
Since Bandhan Contra Fund is a New Fund Offer (NFO), investors should carefully understand its investment strategy before investing.
It is also a good idea to compare the performance and approach of existing contra funds available in the market.
Consulting a qualified financial advisor can help you decide whether this fund matches your financial goals and risk appetite.
