Bandhan MF’s new Contra Fund aims to identify undervalued opportunities

Bandhan Mutual Fund has announced the launch of the Bandhan Contra Fund, an open-ended equity scheme that will follow a contrarian investment strategy by investing in fundamentally strong companies that are temporarily out of favour with the market.

The new fund offer (NFO) will open on August 10 and close on August 24.

The fund will seek to identify businesses that are trading below their perceived long-term potential due to factors such as sector-wide weakness, cyclical downturns, macroeconomic uncertainties or negative market sentiment. The strategy aims to benefit if the companies’ fundamentals improve and the market subsequently re-rates their valuations.

A contra fund typically follows a contrarian approach, investing in stocks or sectors that are currently underperforming or overlooked, rather than those that are leading the market. Such strategies are generally suited to investors with a long-term investment horizon who can remain invested through market cycles.

Bandhan Mutual Fund said the scheme is intended to complement traditional growth and value-oriented equity portfolios by providing exposure to companies that may benefit from changing market perceptions and improving earnings.

Commenting on the launch, Vishal Kapoor, Chief Executive Officer of Bandhan AMC, said the widening valuation gap across sectors has created opportunities for selective contrarian investing. He said several companies with improving fundamentals and earnings prospects continue to trade below their long-term potential, providing scope for re-rating over time.

The fund house said the scheme is designed for investors looking for a differentiated equity strategy and who are comfortable remaining invested over the long term.