Bandhan Mutual Fund is currently offering its new 'Bandhan Contra Fund' with an NFO closing August 24. Manish Gunwani, Chief Investment Officer (Equity), advises that a 2-3 year horizon is necessary for this strategy, which bets against market trends. The fund is classified as 'Very High Risk' by SEBI, as it focuses on assets that are currently undervalued or facing temporary sector pressure.
Bandhan Mutual Fund has launched the 'Bandhan Contra Fund,' with its new fund offer (NFO) period open for subscriptions from August 10 to August 24, 2026. As the firm markets this new product, Manish Gunwani, Chief Investment Officer (Equity) at Bandhan AMC, has emphasized that investors interested in a contrarian strategy must adopt a patient approach, ideally keeping a two-to-three-year investment horizon in mind.
Contrarian investing involves betting against the current market sentiment by buying assets that are unpopular or out-of-favor. Gunwani noted that rapid changes driven by artificial intelligence and geopolitical shifts are creating increased volatility, which in turn leads to temporary price swings in various sectors. This environment is the primary reason the fund house believes a longer time frame is essential for the investment thesis to play out.
To identify potential opportunities, the fund house is utilizing a specific '4-GATE' framework. This approach is designed to spot stocks across four categories: companies undergoing a turnaround, opportunities driven by macro-economic changes, stocks impacted by negative market sentiment, and sectors facing temporary overhangs. The goal is to buy these assets when the market is pessimistic, hoping for a recovery as the underlying value is realized over time.
Investors considering this scheme should be aware of the inherent risks. The Securities and Exchange Board of India (SEBI) has classified this fund as 'Very High Risk.' This rating reflects the nature of contrarian investing, where the investor is going against the crowd. If the market continues to ignore or avoid the chosen stocks for an extended period, or if the anticipated turnaround does not happen, the fund could see negative performance. Because the fund focuses on out-of-favor assets, there is no guarantee that these stocks will recover within the expected timeframe.
The benchmark for this fund is the BSE 500 Total Return Index (TRI). For those looking at the structure of the fund, it includes an exit load of 0.5% for any units redeemed within 30 days of the investment date. This is a common feature intended to discourage very short-term trading in a fund designed for a longer-term strategy.
As the NFO period approaches its end on August 24, investors may watch for further management commentary on how the fund intends to allocate capital across these four categories, especially given the current global and domestic market volatility.