So far we have discussed value funds and growth funds. Now, let's take a look at another investment style that is the Contra funds, contra funds or mutual funds, which are defined by the investment style which is known as the against the wind investment style. This will become clear very soon the managers of contra funds wait against the prevailing market trends that is, they do not go for the shares which are trading at a good price or which are showing profitable trends at this point of time. Instead, they go for underperforming or depressed stocks. And based on the fact that these underperforming or depressed stocks can be bought at a low price because they are underperforming or they're depressed and the market sentiment is not with them. And these may turn around at a later point of time and provide a lot of profits.
Contra funds based on that assumption that herd behavior among investors may The market very costly are very cheap at times. So they bet against the herd behavior and go for the ones which are not doing very well at any point of time. contra funds should not be confused with value funds, value funds seek to invest in undervalued stocks based on the price and evaluation of fundamentals. On the other hand, contra funds seek to take underperforming stocks or underperforming sectors and achieve valuation which are likely to perform well in the long term. Take for example, in India last in 2018, the pharma sector was underperforming. So the control fund managers will be picking up stocks in the pharma sector with a view that in another two to three years, these stocks will be performing very well.
Given Here are some examples of contra funds in the Indian market. If you see that, if the Contra fund is well managed, it can provide a very high rate of return Thank you for listening. See you in the next lecture.