Bandhan Mutual Fund's new fund targets overlooked companies. Here's what investors should know

Bandhan Mutual Fund is launching a new equity scheme that bets on companies the market has temporarily overlooked, offering investors an opportunity to benefit from potential recoveries in fundamentally strong businesses, according to a report by Moneycontrol.

The asset management company (AMC) on Thursday announced the launch of the Bandhan Contra Fund, an open-ended equity scheme that will follow a contrarian investment strategy. The new fund offer (NFO) will open for subscription on August 10 and close on August 24.

According to the AMC, the fund will invest in fundamentally strong businesses that are temporarily out of favour due to factors such as sector-wide headwinds, cyclical downturns, macroeconomic uncertainty or negative market sentiment. The strategy aims to identify companies that could see a re-rating as business fundamentals improve and investor sentiment turns more favourable over time.

Don't Miss: RBI tightens loan recovery rules, bars harassment and strengthens borrower protection

Commenting on the launch, Vishal Kapoor, CEO, Bandhan AMC, said the current market environment offers attractive opportunities for contrarian investing.

"The launch of Bandhan Contra Fund comes at a time when valuation spreads across sectors have widened considerably, creating opportunities for selective contrarian investing. Several sectors and companies continue to trade below their long-term potential despite possessing sound business models, improving earnings visibility and strengthening balance sheets. Such sectoral divergence can provide fertile ground for investors seeking opportunities beyond the prevailing market consensus," Kapoor said.

He added that the fund will follow a disciplined contrarian investment framework with a growth bias, aiming to benefit from improving fundamentals, earnings recovery and the potential for market re-rating.

The AMC said the scheme is intended for investors looking to diversify their equity portfolios through a differentiated investment approach that complements traditional growth and value strategies. It added that the fund may be suitable for long-term investors who are willing to stay invested across market cycles and seek to benefit from opportunities created by changing fundamentals and market inefficiencies.