Bandhan Mutual Fund has announced the launch of its new Bandhan Contra Fund, an open-ended equity scheme that follows a contrarian investment strategy. The fund aims to identify fundamentally strong companies that are currently undervalued by the market but have the potential to deliver long-term growth.

The New Fund Offer (NFO) is scheduled to open next week, giving investors an opportunity to participate in the scheme. Before investing, it is important to understand how contra funds work, who they are suitable for, and the risks involved.

Bandhan Contra Fund NFO: Important Dates

The Bandhan Contra Fund will be available for subscription through its New Fund Offer (NFO) during the following period:

• NFO Opens: August 10, 2026

• NFO Closes: August 24, 2026

• Fund Type: Open-ended equity mutual fund

• Investment Style: Contrarian investing

After the NFO closes, the scheme is expected to reopen for regular purchases and redemptions as per mutual fund regulations.

What Is a Contra Fund?

A contra fund follows a contrarian investment approach, which involves investing in stocks that are currently out of favor with the broader market.

Instead of chasing sectors or companies that are already performing well, fund managers look for businesses with strong financial fundamentals whose share prices may have declined due to temporary challenges or weak market sentiment.

The underlying belief is that once business fundamentals improve, the market may reassess the company's value, potentially leading to a recovery in its share price.

Why Are Some Stocks Available at Lower Valuations?

Companies selected under a contrarian strategy may trade at discounted valuations for several reasons, including:

• Temporary business-specific challenges

• Weak investor sentiment

• Sector-wide or cyclical downturns

• Short-term earnings pressure

• Broader market corrections

Contra fund managers attempt to identify companies where these issues are temporary rather than structural, expecting long-term value creation when market conditions improve.

Who Should Consider a Contra Fund?

Financial experts generally believe contra funds are more suitable for investors with a long investment horizon.

Since undervalued stocks may take time to recover, investors should be prepared to remain invested for several years rather than expecting quick gains.

Contra investing may appeal to those who:

• Have a long-term wealth creation goal.

• Can tolerate short-term market volatility.

• Want diversification beyond traditional growth-oriented equity funds.

• Prefer value-based investment opportunities.

Because returns can vary significantly over shorter periods, patience is considered an important part of this investment strategy.

Why Bandhan Mutual Fund Sees an Opportunity Now

According to Bandhan Mutual Fund, adding a contra strategy can complement traditional growth and value-focused equity portfolios.

The fund house believes that valuation gaps across different sectors have widened in the current market environment, creating opportunities to identify quality businesses that may be trading below their intrinsic value.

By investing in companies before broader market sentiment improves, the scheme aims to benefit from potential price re-rating over the long term.

How Have Contra Funds Performed Historically?

Historically, contra funds have delivered competitive long-term returns, although past performance should never be treated as a guarantee of future results.

Industry data indicates that contra funds have generated average long-term returns in the range of 14% to 18%, depending on market conditions and the investment period.

For example, SBI Contra Fund has delivered annualized returns broadly within the 15%–18% range since its launch. However, investors should remember that historical returns do not ensure similar performance in the future.

Market conditions, stock selection, and fund management decisions can significantly influence actual returns.

Things Investors Should Evaluate Before Investing

Before investing in any New Fund Offer (NFO), investors should carefully assess whether the scheme aligns with their financial goals and risk profile.

It may be useful to compare the proposed strategy with existing contra funds already available in the market. Reviewing factors such as investment philosophy, portfolio construction, fund management approach, expense ratio, and long-term performance of similar schemes can help investors make a more informed decision.

Consulting a qualified financial advisor is also recommended, particularly for investors who are new to mutual funds or unfamiliar with contrarian investing.

Understanding an NFO

A New Fund Offer (NFO) is the initial subscription period during which an asset management company launches a new mutual fund scheme.

While NFOs allow investors to enter a newly launched fund at its initial offer price, they should not be viewed as inherently better than existing mutual fund schemes. The quality of the investment strategy, fund management process, and long-term suitability are generally more important than whether a fund is newly launched.

Disclaimer: This article is for informational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risks. Investors should read all scheme-related documents carefully and consult a qualified financial advisor before making any investment decisions.