What is a contra fund?

Contra funds are a type of equity fund where the fund manager bets against the prevailing Market trends by buying assets that are either depressed or under-performing at that point in time.

What is the difference between Contra Fund and Value fund?

Contra funds and value funds follow an unorthodox approach to buying stocks. Contra funds invest in underperforming stocks while value funds invest in undervalued stocks. But both contra funds and value funds are high-risk, long term investments that require thorough analysis, research and patience.

Is Contra Fund a good investment?

Advantages of Investing in Contra Funds The fund manager identifies and invests only in the undervalued companies having strong fundamentals. This gives you the opportunity to realise massive gains in the long run. During a bull run, the contra funds have the potential to provide benchmark-beating returns.

What is difference between Multicap and Flexicap fund?

The large-cap allocation of multi-cap funds will limit downside risks in volatile markets. The flexi-cap category of equity funds, on the other hand, will invest at least 65\% of the total assets in equity investments without any defined limits in terms of exposure they should take to large-, mid- or small-cap segments.

Are Contra funds safe?

Contra funds are known to be highly risky because the investment is based on the future expectation of the stocks performing, which may take many years. Value funds too fall in the category of high-risk investments. Both types of funds require a lot of patience and articulation and are meant for long-term investors.

What is multicap fund?

Definition: These are diversified mutual funds which can invest in stocks across market capitalization. Description: These funds invest in stocks across market capitalization. That is, their portfolio comprises of large cap, midcap and small cap stocks.

What is aggressive hybrid fund?

Aggressive Hybrid Funds are mutual funds that invest mainly in stocks along with a limited allocation in debt instruments. These funds can have maximum exposure in equity up to 75 percent with at least 25 percent allocation to FD-like instruments.

Where does Contra fund invest?

A Contra Mutual Fund invests against the existing market trends and purchases stocks which are not performing well currently. The fund manager takes a contrarian view of the stock when it is shunned by the investors and also when there is a superlative demand for the same.

What type of mutual fund is free from risk?

When an investor wants to invest in a low-risk mutual funds it’s usually because he needs to secure his money or earn optimal returns in a short duration….

• Franklin India Ultra Short Bond Fund – Super Institutional Plan.
• UTI Ultra Short Term Fund.
• IDBI Ultra Short Term Fund.
• Essel Liquid Fund.
• BOI AXA Liquid Fund.

What is a multicap mutual fund?

A multicap mutual fund is a fund that invests across large cap, mid cap and small cap stocks. Multicap mutual fund schemes are recommended to equity investors with a moderate risk appetite.

How does a contra mutual fund work?

The fund manager of a Contra Mutual Fund purchases stocks at a value lower than its expected value in the long-term. There can be times when certain sectors witness a slump due to the prevalent market conditions.

What is the difference between multi cap and small cap?

Net-net, most of the large AMCs have moved their erstwhile multi cap fund to the new category. However, as per regulation, an AMC can have funds in both categories. Speaking of performance, small cap stocks have outperformed large cap ones. This is uncanny, because usually when the economy is recovering after a slowdown.

Are small cap funds better than large cap funds in 2021?

Historically, small cap stocks have done better. Till 15 June 2021, 10-year returns from small cap funds (regular option) is 17.47\% annualized and that from Large Cap funds is 12.39\%. However, volatility has been higher in small cap funds.