Any value investor we know talks about a term called ‘Contrarian.’ In this article, we are trying to introduce you to contra investments, how a contrarian investor works, what mutual funds follow the contrarian investing method, etc.
A Contrarian investment is an investor’s behavior that opposes the trend. When markets fall, most of us panic and take the investment away, but a contrarian investor thinks it is the best time to invest. In the same way, when everyone is buying stocks aggressively, anticipating further growth, a contrarian believes it’s the time to exit the investment. Thus, an investment behavior that contradicts the crowd in the market is called Contrarian Investment.
In most of his letters to shareholders, Warren Buffet explained how being a contrarian helped him make profits, choose companies, and add or average the price of investments.
However, being contrarian alone does not help an investor achieve great success like Warren Buffet.
We should never forget choosing the right businesses to invest, understanding financials, and estimating management’s ability to navigate the company through different market cycles. Understanding the fairly valued, undervalued, and overvalued stocks is another vital concept an investor should focus on.
Now ignoring the other essential parameters of success, can you be a contrarian investor? Of-course yes. There are experienced fund managers for handling your portfolio, selecting stocks, and maintaining an asset allocation in mutual funds.
Below are the three contra funds available in the market
SBI Contra Fund with an AUM of Rs. 4,584.00 Crores.
Kotak India Equity Contra Fund with an AUM of 1,227.00 Crores.
Invesco Contra Fund with an AUM of Rs. 8,535.00 Crores.
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