The Contra funds are _:
1. likely to perform well in the long run, but not in the short term
2. likely to perform well in the short run, but not in the long term
3. issued with guaranteed return and as a contract
4. those funds in which ONLY corporate investors are allowed to invest
Choose the correct statements from the codes given below:

Answer: [A] Only 1

As the name suggests, these funds take a contrarian view on equities. The fund manager picks underperforming stocks or sectors, which are likely to perform well in the long run, at cheap valuations. For instance, experts held a contrarian view on telecom stocks for a two-year period.

These funds are mostly a part of the equity-diversified category. The difference lies in the style of investing. For instance, a strengthening rupee strains the margins of IT companies as their major business comes from the US. But, a contra fund manager would pick IT stocks and wait for the rupee to weaken. ING Contra, Kotak Contra, L&T Contra, Magnum Contra, Religare Contra, Tata Contra and UTI Contra are some known contra funds.

This question is a part of GKToday's Integrated IAS General Studies Module