List of Best Contra Mutual Funds in India for 2025
Contra funds are equity mutual funds that use a contrarian investment strategy. They invest in undervalued stocks that have the potential to grow in the future. Fund managers actively pick stocks with strong fundamentals that the market currently ignores. This blog explains the top-performing contra funds in India and helps you understand their concept, benefits, drawbacks, taxation, and how to invest in them.
Top Contra Funds to Invest in India Based on 5Y CAGR
Discover promising investment opportunities with our carefully curated top contra funds list for 2025 below.
| Fund Name | AUM (in Cr.) | CAGR 3Y (%) | Expense Ratio (%) |
|---|---|---|---|
| SBI Contra Fund | 41,906.90 | 24.03 | 0.57 |
| Kotak India EQ Contra Fund | 4,034.33 | 22.85 | 0.55 |
| Invesco India Contra Fund | 18,018.85 | 21.90 | 0.52 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the top contra funds in India is as of 10th November 2025 and is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of Top Contra Funds
SBI Contra Fund
SBI Contra Fund follows a contrarian approach and invests in companies that appear undervalued or ignored but have strong long-term potential. The fund identifies value opportunities in different sectors and uses a disciplined stock selection process with diversified exposure to gain from market corrections.
Invesco India Contra Fund
Invesco India Contra Fund invests in companies that are currently out of favour but show strong long-term fundamentals. The fund applies a contrarian strategy to find mispriced opportunities across sectors and focuses on value, stability and long-term recovery.
Kotak Contra Fund
Kotak Contra Fund follows a contrarian philosophy and invests in stocks that the broader market often undervalues or ignores. The fund targets companies with improving prospects and captures long-term growth through disciplined stock picking across different sectors.
What are Contra Funds?
Contra funds invest in stocks that move against market trends. They focus on underperforming or undervalued stocks, believing these will recover and deliver strong returns. These funds work on using temporary market inefficiencies to their advantage. Contra mutual funds aim to earn higher returns over time by identifying distorted asset values and buying stocks for less than their real worth.
Tax on Contra Funds as per Budget 2024-25
Contra mutual funds are equity-oriented funds and therefore, are taxed like any other equity mutual fund scheme. Dividends earned from contra MFs are taxable according to the investor’s respective slab rates. Let’s examine the following table to gain a better understanding of STCG and LTCG.
| Type of Gain | Holding Period | Tax Rate |
| Short-Term Capital Gains | Less than one year | 20% |
| Long-Term Capital Gains | More than one year | 12.5% and gains up to ₹1.25 lakh remain tax-free |
How to Invest in Contra Mutual Funds?
You can easily start to invest in contra mutual funds by following these steps:
- To invest in the best contra mutual funds, you can visit a mutual fund investment platform such as smallcase.
- The next step is to research and identify the contra mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
- Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode, either a one-time or lump sum, and complete the process.
However, if you’re confused about which stocks to pick, you can explore smallcases:
- smallcases are readymade model portfolios of stocks/ETFs, that are based on a theme idea or strategy
- They’re created and managed by SEBI-registered investment experts (also known as smallcase managers)
- smallcase offers over 500+ stock portfolios, created by 200+ managers
How Contra Mutual Funds Work?
Contra mutual funds adopt a contrarian investment strategy by investing in stocks that are undervalued or temporarily out of favour in the market. Fund managers typically seek companies with strong fundamentals that are overlooked due to market sentiment or short-term challenges. These funds focus on long-term potential, aiming to capitalise on price corrections when the market eventually recognises the actual value of these stocks.
The core idea behind contra funds is that they invest in what others are avoiding, buying undervalued stocks in sectors or companies that may be temporarily underperforming. This strategy requires patience, as the market may take time to realise the intrinsic value of these investments. The goal is to generate higher returns as these undervalued stocks appreciate over time.
Contra Funds vs Value Funds
| Aspect | Contra Funds | Value Funds |
| Investment Strategy | Invest in stocks that are out of favour or underperforming, aiming for recovery when market sentiment shifts. | Invest in undervalued stocks based on fundamental analysis, targeting stocks that trade below their intrinsic value. |
| Risk Profile | Higher risk due to investing in stocks that are currently unpopular, volatile, and may take time to recover. | Lower risk compared to contra funds, focusing on undervalued stocks with stable fundamentals. |
| Investment Horizon | Typically requires a long-term horizon as stocks may take time to recover. | Can be long-term as well, but stocks may recover more quickly when the market recognises their value. |
| Market Conditions | Performs well in market corrections or when market sentiment turns negative, as these stocks may recover. | Performs well in stable or growing markets where undervalued stocks eventually reflect their actual value. |
| Focus on Stock Selection | Focuses on stocks that are temporarily undervalued due to market sentiment or negative news, rather than based on strong fundamentals. | Focuses on stocks with solid fundamentals but are undervalued, often due to temporary factors. |
Features of Contra Mutual Funds
- Undervalued Stocks: Contra mutual funds invest in stocks that the market has undervalued. These stocks might be temporarily overlooked or underappreciated but may experience price appreciation if market conditions change. This strategy targets potential market inefficiencies.
- Contrarian Investment Strategy: These funds use a contrarian approach, buying stocks that are out of favour or underperforming. The strategy is based on the idea that these stocks could improve if market sentiment shifts or when their actual value is recognised.
- Long-Term Focus: Contra funds typically require time to recover. Since the stocks selected by these funds may take time to show improvement, they are usually aligned with long-term investment horizons.
- Diversification: By investing in less popular or undervalued sectors and stocks, contra funds can provide diversification. This approach enables investors to diversify their risk beyond conventional growth stocks and explore opportunities in less-followed market areas.
Benefits of Contra Funds
- Investment in Undervalued Stocks: Contra funds invest in stocks that are currently undervalued and have the potential to rise in price when market sentiment changes.
- Diversification: These funds invest in less commonly targeted sectors or stocks, which helps investors achieve better diversification beyond typical growth stocks.
- Contrarian Strategy: Contra funds follow a strategy of buying stocks that are currently unpopular, creating opportunities when the market sentiment improves.
- Long-Term Investment Horizon: These funds are suitable for investors who plan to hold their investments for the long term, as undervalued stocks may require time to recover.
- Market Cycle Dynamics: Contra funds often perform better during market cycles when undervalued stocks begin to rebound.
Risks Involved with Contra Funds
- Market Sentiment Risks: Market sentiment has a strong influence on the performance of contrarian funds. If the market does not change as expected or if stocks stay out of favour, the fund may perform poorly.
- Volatility: Stocks in contrarian funds typically exhibit higher volatility than the broader market, as they often include companies or sectors facing difficulties. These stocks can remain under pressure for an extended period and exhibit larger price swings.
- Uncertain Recovery: Contra funds rely on the idea that undervalued stocks will recover over time. However, recovery may not occur as expected, or some stocks may never recover, which can negatively impact the fund’s performance.
Factors to Consider Before Investing in Contra Funds in India
- Investment Horizon: Contra funds are typically suited for long-term investment horizons. Given that it may take extended periods for undervalued stocks to show improvement, investors should be prepared to hold investments for a longer duration.
- Risk Tolerance: Due to the inherent volatility and uncertainty of contra strategies, these funds may not suit all investors. It is essential to assess personal comfort with risk and the potential for short-term losses or prolonged underperformance.
- Market Conditions: The effectiveness of a contra fund depends on the state of the market. In bull markets, where growth stocks are typically favoured, contra funds may face challenges. However, in bear markets or when market sentiment changes, these funds may see potential benefits.
- Fund Manager’s Strategy: The success of contra fund is influenced by the skill of the fund manager. A fund manager with experience in identifying undervalued stocks and timing market shifts can have a significant impact on the fund’s performance. It is helpful to evaluate the manager’s approach and track record.
Who Can Consider Investing in a Contra MFs?
- Risk-tolerant Investors: Those who can handle higher volatility and are willing to take on more risk.
- Long-term Investors: Ideal for individuals with a long-term investment horizon who can wait for stocks to realise their potential.
- Value Investors: Those who believe in the potential of undervalued stocks and are looking for investments that may not be currently popular but have the potential for future growth.
To Wrap It Up…
Contra MFs can be a valuable addition to an investment portfolio for those who are willing to take on higher risk for the potential of higher returns, provided they have a long-term investment horizon and a contrarian investment philosophy. However, it is always worthwhile to take the help of a financial advisor and do your own research before investing.
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Frequently Asked Questions (FAQs) on Conta Funds
A contra fund is a type of mutual fund that potentially invests in forces opposing the market. This means these contra equity funds invest in stocks that are undervalued, as opposed to well-performing stocks in the market.
Contra MFs may carry high risk due to their contrarian nature, which might not be ideal for conservative investors. Investors should be mindful of potential volatility when considering contra fund returns.
Contra funds invest in stocks that are currently out of favour or undervalued, but have the potential for future appreciation. These funds focus on companies that are expected to rebound over time, making them a part of equity contra funds.
The choice between the best contra mutual funds and other mutual funds depends on individual risk tolerance, investment goals, and belief in the contrarian investment strategy.
Contra funds are considered high-risk investments due to their focus on undervalued and underperforming stocks.
