Sometimes,due to some reasons stock may trade at lower levels than its actual values.Contra funds works on this idea of picking the stock when it is weak.By purchasing the stock,fund manager believes that market will recognise the stock value and will trade at the intrinsic value in future.In general,contra funds prefers to invest in large cap stocks only.
Different parameters like PE ratio,Book value,Earnings per share,Sector average performance,Hidden asset etc. are considered before choosing the stocks.
Some of the active contra mutual funds in India are:
1.SBI Magnum Contra Fund:This fund was launched in July 1999.It was a smart performer before few years.But performance is below average since last few years,,along with other funds of SBI mutual fund.It has provided CAGR returns of 24% since inception.
2.Kotak Contra Fund:Kotak contra fund was launched in June 2005 and have provided the returns of 12% CAGR since inception
3.UTI Contra fund: This fund was launched in March 2006,,and remained as a bad performer since inception.
4.Reliance Quant Plus: This fund may be the best performer among this cateogary.It have always beaten the benchmark with comfort.
Fund was launched in April 2008 and have provided the returns of 16% in last one year and 10% since its inception.
