How do Contra Funds work?

Contra funds are funds that invest against the trends of the market, with particular focus on companies that are presently underperforming but have a significant potential for recovery. These funds look for chances in stocks or sectors that are undervalued or not in favor, with the expectation that they will eventually make a return.

Where are Contra Funds typically invested in?

The purpose of these funds is to achieve diversity while concentrating on undervalued assets. They invest in large, mid, and small-cap companies as well as stocks from a variety of other industries. Because of this approach, they are able to capitalize on potential growth throughout the whole range of the market.

Do Contra Funds give profit?

Contra Funds have the potential to generate attractive returns by investing in undervalued stocks poised for a rebound. However, their success depends on the fund manager's ability to accurately pick such stocks and the market's recognition of their true value over time.

Are Contra Funds tax-free?

Contra Funds are not exempt from paying taxes. They are subject to capital gains tax, much like other equity mutual funds, with the rate of taxation of the capital gains tax varying according to the period of time the investment has been held.

How are profits under Contra Funds taxed?

Short-term capital gains, which are profits on investments held for less than a year, are subject to a tax rate of 15%. On the other hand, long-term capital gains, which are gains on investments held for more than a year, are exempt from taxation up to a maximum of ₹1 lakh. The tax rate for any profits that are more than ₹1 lakh is 10%.

How to choose the best Contra Funds?

For the purpose of choosing the best Contra Fund, it is necessary to consider the investing strategy, management team, and performance history of the fund. Because Contra Funds usually demand a long-term commitment for the greatest possibility of success, it's crucial to evaluate your individual risk tolerance and investing horizon.

Is it necessary to open demat account for investing in Contra Funds?

Contra Funds do not need you to have a demat account in order to invest in them. Without the need for a demat account, you may purchase these funds directly via the website of a mutual fund or through an investing platform that specializes in mutual funds. This will make the procedure easier for you.

What is better in Contra Funds - Lump Sum or SIP?

In Contra Funds, your investment plan and goals will help you decide whether to make a lump sum or a SIP (Systematic Investment Plan). SIPs allow for disciplined investing over time, potentially averaging out the cost. Lump Sum may suit if you have a significant sum to invest at once, particularly in a market downturn when undervalued stocks may be more prevalent.

How to start Contra Funds SIP online?

To start an Contra Fund SIP online, follow these 4 steps: 1. Open Demat Account, 2. Choose the Contra Fund you wish to invest in, 3. Choose the SIP option, specifying the amount and SIP date, 4. Set up an auto-pay via bank account to automate the SIP payments.

Can you sell Contra Funds anytime?

The answer is yes; you are free to sell or redeem your Contra Fund assets whenever you choose. Nevertheless, taking into account the contrarian and long-term attitude that these funds use, it can be advantageous to keep your investment for an extended period of time in order to acquire the potential for benefits.

Is there any lock-in period for Contra Funds?

There is often no lock-in term associated with Contra Funds, which means that you have the opportunity to redeem your investment whenever you see fit. Because of this function, you will be able to manage your investment in accordance with your financial goals and the current market circumstances.

What are the risks associated with Contra Funds?

Contra Funds, by nature, invest in stocks or sectors that are currently out of favor and may carry higher risk, especially in the short term, due to their contrarian approach. The success of these funds depends on the fund manager's ability to pick undervalued stocks that will eventually perform well, making them subject to market risk and volatility.

Are Contra Funds 100% safe?

Even Contra Funds are not completely risk-free investments. While they offer the potential for high returns by investing in undervalued stocks, they also come with the risk of underperformance if the market does not turn in favor of the selected stocks or sectors. It's essential to align such investments with your risk tolerance and financial goals.

Top Rated Contra Funds in 2026 - Best Contra Funds

Name	1Y Returns	3Y Returns	5Y Returns
SBI Contra Fund Direct - Growth Compare	2.49%	18.16%	19.72%
Kotak Contra Fund Direct - Growth Compare	6.19%	20.11%	16.78%
Invesco India Contra Fund Direct - Growth Compare	-0.33%	18.52%	15.14%

A Contra Mutual Fund undertakes a contrarian investment strategy. Fund managers select stocks that are against market trends and search for undervalued stocks. Here are a few features that define Contra Funds:

The major differentiating element of contra funds is contrarian investing. Fund managers search for opportunities in companies or industries that the market has neglected or that are temporarily undervalued or at discounted prices.
Contra Funds can help you maintain a diverse portfolio. Diversification limits the negative impact of a single investment and spreads risk.
Effective market timing is often required for successful contrarian investing. Fund managers need to determine when specific stocks are undervalued or when a shift in mood is likely to occur in the market cycle.

Contrarian investing often takes a long-term perspective. Fund managers think that the market will eventually recognize the true worth of the stocks that they have picked, resulting in capital appreciation. Also, not every underperforming stock or industry has the potential to improve in the future. So, you need to carefully assess the fund’s past performance and the fund manager’s history and expertise before investing.

Investing in Contra Funds can benefit you in several ways, especially if you feel comfortable using a contrarian investment approach. Here are a few benefits of making investments in Contra Funds:

You can expect decent returns when investing in Contra Funds. The investments done by contra funds are still not at their true values. So, if a turnaround occurs, they might perform incredibly well and can give you substantial returns.
Contra fund managers are free to change the asset allocation of the fund as per the market conditions. This flexibility allows them to avoid potentially expensive market sectors and to capitalize on new opportunities.
Since the fund invests in stocks after careful consideration, it eliminates the effort on your end for stock selection.

Investing in Contra Funds has potential benefits, but it's crucial to understand that there are drawbacks as well. There is no assurance that the market will eventually appreciate the value that fund managers perceive in their investments. It may take some time to perform and reach their true potential. Before investing in Contra Funds, you should carefully consider your risk tolerance because higher potential profits are often accompanied by higher volatility.

To help you decide if Contra Funds are right for you, keep the following considerations in mind:

To determine whether to invest in Contra Funds, you need to consider some factors, such as your investment strategy, risk tolerance, and financial objectives. Selecting a reputable Contra Fund with an experienced management team is important.
Contra Funds are considered riskier investments compared to other safe options like Large Cap funds and debt instruments. They have a higher level of volatility since they contradict conventional market practices. Determine your risk tolerance and determine that you are prepared to handle any potential volatility in the value of contra funds.
Consider your investing horizon or how long you intend to stay invested in this fund. A longer-term perspective may be necessary for contrarian strategies since the chosen stocks may need some time to recover and perform.

Contra Funds can generate decent returns in the long run, but there is no alternative to having a diversified portfolio.

Here are the considerations you should make while making an investment in Contra Funds:

The performance of Contra Funds is directly related to the stock selections by the fund managers. You need to have a higher risk appetite for investing in these funds.
If you have a long-term investment horizon, then only you should consider adding Contra Funds to your portfolios. Contra Funds select underperforming equities with untapped potential, and thus you require patience.
Market sentiment can be difficult to predict, and contrarian strategies may not necessarily result in positive outcomes in the short run. So, you need to be prepared for such market uncertainties too. Contra Funds may not suit you if you are looking for safe investments.

If you have a long investment horizon (five years or more) and have a moderate risk tolerance, then only you should think about investing in a Contra Mutual Funds.

Explore | Sitemap

*All securities mentioned on this website are exemplary and not recommendatory.

*Current prices on the website are delayed by 15 mins, login to check live prices.

We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.

Yet, most investing & trading platforms in India have remained more or less the same over the past decade. Times have changed and retail traders and investors have become smarter about managing their trades and money. Modern traders & investors require an online trading platform that helps them keep up with the technological advancements of our time.

That's why we're building Dhan - to help you trade, to help you invest, and to help you participate in India's growth stock via the stock market with awesome features and an incredible experience.

We are doing so by giving you access to not just one but 6 products within the Dhan ecosystem:

Dhan App: The only online trading app you need for buying and selling equity, futures, options, commodity, and currency.
Dhan Web: Trade on the big screen across segments with our web trading platform.
Options Trader App: A dedicated option trading app built for India's F&O traders.
Options Trader Web: Love big screens and F&O trading? Use our web option trading platform.
Dhan + TradingView: The magic of Tradingview charts for free with the Lightning-Fast experience of Dhan on tv.dhan.co.
Connect to TradingView: Our Tradingview broker integration allows you to trade in Stocks, Futures, and Commodities directly from tradingview.com via Dhan.

This means that with Dhan, you'll be able to start:

Lakhs of users already trust Dhan for their online stock trading and investing needs. Dhan is growing rapidly because of the love we receive from SuperTraders and Long-Term Investors who acknowledge that the platform is innovating for them, building super useful features that help them do everything from investing in stock market to trading F&O like a pro on the Tradingview charts and much more.

While we are growing, we will always remember why we started building in the first place - you. Our user-first approach will always be at the heart of our philosophy. Come join us on this incredible journey!

Try it out, you can close your account at anytime using this link.

SEBI Stock Broker Registration No: INZ000006031 | Depository Participant (CDSL) ID: IN-DP-289-2016 | SEBI Research Analyst Registration No: INH000023357
Exchange Membership No. : NSE: 90133 | BSE: 6593 | MCX: 56320
Registered & Corporate Office: Unit No. 2201, 22nd Floor, Gold Medal Avenue, S.V. Road, Beside Patel Petrol Pump, Piramal Nagar, Goregaon West, Mumbai – 400104, Customer Care: 9987761000.

Details of client bank account

For any query / feedback / clarifications, email at help@dhan.co.

In case of grievances for any of the services rendered by Raise Securities Private Limited, please write to grievance@dhan.co (for NSE, BSE and MCX) or grievancedp@dhan.co (for Depository Participant). Please ensure that you carefully read the Risk Disclosure Document as prescribed by SEBI, our Terms of Use and Privacy Policy. Compliance Officer: Mr. Manish Garg and Mobile: 8655740961 Email: complianceofficer@dhan.co To lodge your complaints using SEBI SCORES, click here.

Disclaimer: All communications with the client via chat, phone, or email are for support purposes only. Any commitments or statements made by the agent (human or virtual) shall not be binding on the company.

DHAN is a brand owned by Raise Securities Private Limited. All DHAN clients are registered under Raise Securities Private Limited. Clients are advised to refer to our company as Raise Securities Private Limited when communicating with regulatory authorities.

Procedure to file a complaint on SEBI SCORES: Register on SCORES portal. Mandatory details for filing complaints on SCORES: Name, PAN, Address, Mobile Number, E-mail ID. Benefits: Effective Communication, Speedy redressal of the grievances. You may refer the website https://scores.sebi.gov.in/ for more information. You may also download the SEBI Scores app to log a complaint Android: https://play.google.com store apps sebiscores iOS: https://apps.apple.com app sebiscores.

Disclaimer: Investment in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed the SEBI prescribed limit

Attention investors:

Stock brokers can accept securities as margins from clients only by way of pledge in the depository system w.e.f September 01, 2020.
Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge.
Check your securities / MF / bonds in the consolidated account statement issued by NSDL/CDSL every month.

Note: As a policy we do not give stock tips or recommendations and have not authorized anyone to give this on behalf of us. If you know anyone claiming to be a part of Dhan / / Raise or our associate companies or partners and offering such services, please report us on help@dhan.co. Important Information for Investors: To prevent unauthorized transactions in your trading / demat account, do not share your account details, credentials or any personal details with anyone. Keep your mobile number updated with your Stock Broker, Depository Participant and ensure that the same is registered with Stock Exchanges, Depository and KRAs. You will receive alerts and information on your registered mobile number / email for debit and other important transactions in your demat account directly from CDSL / Exchange on the same day. KYC is one time exercise while dealing in securities markets - once KYC is done through a SEBI registered intermediary (Stock Broker, DP, Mutual Fund, etc.), you need not undergo the same process again when you approach another intermediary. No need to issue cheques by investors while subscribing to IPO. Just write the bank account number and sign in the application form to authorise your bank to make payment in case of allotment. No worries for refund as the money remains in investor's account. This is issued in the interest of investors.

Investors should be cautious on unsolicited emails and SMS advising to buy, sell or hold securities and trade only on the basis of informed decision. Investors are advised to invest after conducting appropriate analysis of respective companies and not to blindly follow unfounded rumours, tips etc. Further, you are also requested to share your knowledge or evidence of systemic wrongdoing, potential frauds or unethical behaviour through the anonymous portal facility provided on BSE & NSE website. Issued in the interest of the investors.

Raise Securities Private Limited also known as Dhan is only an order collection platform that collects orders on behalf of clients and places them on BSE StarMF for execution. Client expressly agrees that Dhan is not liable or responsible and does not represent or warrant any damages regarding non- execution of orders or any incorrect execution of orders with regard to the funds chosen by the client or due to, but not being limited to, any link/system failure, delay in transfer of the funds on account of any unforeseen circumstances/issues in the banking system/payment aggregators or any other problems that may result in a delay in crediting the funds into the BSE Star MF's bank account. Raise Securities Private Limited (Dhan) does not engage in proprietary trading on its own account.

Mutual fund investments are subject to market risks, read all scheme related documents carefully before investing. Dhan is not a distributor or agent of any mutual fund. Mutual Funds are not exchange-traded products. Any related disputes will not have access to the Exchange-investor redressal forum or arbitration mechanism. For other disclaimers please refer https://dhan.co/advertisement-disclaimer/

Download client registration documents (Rights & Obligations, Risk Disclosure Document, Do's & Don'ts) in vernacular language: BSE | NSE | MCX

Kindly, read the Advisory Guidelines of BSE | NSE | MCX for investors as prescribed by the exchange with reference to their circular dated 27th August, 2021 regarding investor awareness and safeguarding client's assets

Contra Mutual Funds

Best Contra Funds to Invest in 2026

Sorted highest to lowest: 3Y Returns

Returns Calculator Based on Annualised Returns

About Contra Funds

What are Contra Funds

Advantages of investing in Contra Funds

Is it good to invest in Contra Funds

Who should invest in Contra Funds

Explore Equity Funds by Types

Explore Mutual Funds by Types

Open NFOs

Popular Funds

Mutual Fund Calculators

FAQs