The new fund offer (NFO) opened for subscription on September 28 and will close on October 12.
The scheme will seek to invest in companies or sectors that are out of favour with investors or where the fund manager believes market prices do not adequately reflect their potential.
The strategy is based on the premise that such mispricing can correct when business fundamentals, earnings or investor sentiment improve.
The fund will be managed by Sankaran Naren, along with Dharmesh Kakkad, Sakshat Goel and Gaurav Chikane.
How will the fund identify contrarian opportunities?
The fund house said its investment process will be guided by a VCTS framework, which considers four factors, valuations, business cycle, triggers and sentiment.
This means the fund can look for opportunities where valuations have become relatively unattractive because of weak sentiment, a cyclical downturn or other factors, while assessing whether there are potential triggers for a recovery.
The scheme will have the flexibility to invest across sectors and market capitalisations. According to Naren, the focus will be on identifying underperforming stocks rather than restricting the portfolio to a particular market-cap segment.
“Contrarian investing is not just about buying cheap. It requires robust research and a long-term outlook,” Naren said.
The fund house said a contrarian investment may take time to play out, as the underlying sentiment or business cycle may need to change before the market re-rates the stock.
What is the fund’s CLOUD approach?
For portfolio construction, the scheme will use what ICICI Prudential MF calls the CLOUD approach. It comprises:
- Calculate: Conduct research and valuation analysis before investing.
- Leverage: Exercise caution while evaluating companies with high leverage.
- Ownership: Consider low institutional ownership as one potential positive factor.
- Upside: Look for a potential upside based on the investment thesis.
- Disruption: Assess the risk that disruption could affect the company’s business.
The fund house said it may favour companies with prudent debt-to-equity ratios and examine institutional ownership, earnings normalisation and weak investor sentiment while evaluating potential investments.A stock may be sold when the perceived mispricing has disappeared, sentiment has changed, or another investment opportunity offers a stronger investment case, according to the fund house.
Why is the fund house focusing on contrarian investing?
ICICI Prudential MF has pointed to several factors that can create differences in valuations and investor sentiment, including global growth concerns, geopolitical tensions, foreign investor flows, monetary policy, cyclical downturns, leverage, earnings expectations and currency movements.
The fund house also highlighted the concentration in US equities, noting that the top 10 constituents of the S&P 500 accounted for 38% of the index as of June 30, 2026, compared with 19% in 2016, according to Nuvama Institutional Equities.
For India, it pointed to relatively broader market participation but uneven performance across sectors. The fund house’s argument is that sectors that have lagged the broader market can potentially offer contrarian opportunities if the factors weighing on them ease.
These observations, however, are part of the fund house’s investment rationale and do not indicate that any particular sector or stock will outperform.
Who is the fund meant for?
The scheme is intended for investors with a long-term investment horizon who can remain invested while a contrarian investment thesis plays out.
Unlike a strategy that simply buys stocks based on low valuations, a contra approach involves taking positions that may differ from prevailing market sentiment and waiting for the factors behind the investment thesis to change.
Investors should therefore consider the scheme’s investment strategy, risks, asset-allocation framework and other details in the scheme information document before investing. Past performance or the potential for a sector or stock to recover does not guarantee future returns.