What is the meaning of Contra Fund?

Contra Fund is a type of fund which is different from other such funds by the style of investing. It takes a contrarian view of the asset. It is the poor performance of the asset which usually allows distortions in valuations. The contra funds usually capitalise on these distortions. It is assumed that the asset will bounce back to its real value in the long term once the short-term issues stopping it either become irrelevant or are completely eliminated. The basic idea is to purchase the assets at a cheaper cost than its fundamental value for the longer term. Also, a fund which capitalises on the commodities slump by taking stocks in companies which belong to the sector is called a contra fund. ING Contra, L&T Contra, SBI Magnum Contra, Kotak Contra etc.



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