‘Contra’ comes from the word contrarian, which essentially means going against prevailing norms. Contra mutual funds, typically equity in nature, invest in themes and stocks which are non-performers and depreciated currently but nevertheless have strong fundamental values. So, these funds follow a contrarian view and bet on stocks that are expected to perform in the future. Contra funds are generally cyclical in nature and generate high returns after a relatively long gestation period.
The fund managers of contra mutual fund schemes essentially look for those undervalued stocks which have not participated in the market momentum for various reasons. Factors for undervaluation could stretch from regulatory measures to business cycles or
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