समृद्धि की पाठशाला

    What is Contra Fund   A contra fund is distinguished from other funds by its style of investing. A contra fund takes a contrarian view of an asset, when it either witnesses exuberant demand from investors or is shunned by them at a particular point in time due to short-t erm triggers. The asset’s poor performance or outperformance leads to distortion in valuations, which is what a contra fund seeks to capitalise on. The underlying assumption is that the asset will stabilise and come to its real value in the long term once the short-term concerns plaguing it either become irrelevant or are mitigated. The idea is to buy assets at a cost lower than its fundamental value in the long term. Investors must take note of the fact that contra funds may not perform in the short term because of the kind of assets they invest in. The contra fund may pick up stocks that are out of favour or invest in sectors that are witnessing a slump. A fund that seeks to capitalise on a comm...