The Hindu Business Line : Tata MF bets on contrarian style

The proposed Tata Contra Fund, which will adopt a bottom-up approach, will invest in stocks of companies irrespective of market capitalisation. The idea is to de-emphasise the relative importance of economic cycles and instead focus on individual stocks.

Contrarian investing, states the offer document filed with SEBI, refers to buying into "fundamentally sound scrips that have been overlooked by the market (for reasons of short-term trends)".

These have been waiting for investors to assign them their real value in course of time.

Tata Contra will examine fundamentally-sound companies with long-term growth potential, those that have attractive valuations.

A company's intrinsic value will be ascertained on the basis of factors such as growth potential, product range, competitive position and management strengths.

"Attractive valuation could be a result of an early identification of positive fundamental changes in the underlying company, such as significant cost-cutting, launch of new products, expanding distribution network, consolidation in the industry etc.," the offer document said.

Under normal circumstances, a minimum 70 per cent of the scheme's assets will be invested in equities.

It may invest in derivative instruments for hedging and portfolio balancing. Mr Venugopal M has been named as the fund manager.

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