Fund managers use various investment styles to meet a scheme's objectives, and the contrarian approach is one that attracts many investors. Although it carries higher risk, this strategy can offer the potential for exceptional returns. Contra Mutual Funds follow this contrarian style, and understanding their key features is important for investors considering them.

Contra Mutual Funds invest against prevailing market trends by buying temporarily underperforming or ignored stocks. Fund managers take advantage of distorted asset values created by over- or under-performance, assuming prices will return to normal in the long run. They purchase stocks at prices below their long-term potential and often invest in sectors facing short-term downturns, holding them until conditions improve. These funds typically perform better over longer periods and are not suitable for short-term investing.

1. High Risk–Reward Profile: Contra mutual funds carry a higher risk-reward ratio as they invest in companies with strong turnaround or growth potential. Fund managers carefully analyze such companies to identify future opportunities.
2. Equity-Focused Investment: These funds allocate a minimum of 65% of their assets to equity and equity-related instruments, highlighting their primary focus on long-term equity growth.

1. You can invest in these funds either directly through Asset Management Companies or easily via the Retail Pe platform.
2. Simply sign up on the Retail Pe app, complete your KYC, and begin investing.

1. Potential for High Returns: Contra funds can generate strong returns when undervalued or underperforming stocks recover.
2. Long-Term Investment Opportunity: These funds are suitable for long-term investors who are willing to wait for value to materialize.
3. Portfolio Diversification: Contra funds add diversification by offering exposure beyond traditional investment options.

Long-Term Capital Gains (LTCG):

Applicable when mutual fund units are held for the long term

Taxed at 10% without indexation

Tax applies only if gains exceed ₹1 lakh in a financial year

Short-Term Capital Gains (STCG):

Applicable when mutual fund units are sold in the short term

Taxed at a flat rate of 15%

These tax rules are important for tax planning and maximizing mutual fund returns