Value vs Contra Funds: Which SIP Builds More Wealth?

Value funds buy cheap stocks based on numbers. Contra funds buy hated stocks based on a gut-checked view. Both are risky but can beat the market — if you stay invested for 5+ years.

Here's what happened: SEBI classifies value funds and contra funds as distinct equity mutual fund categories, with each AMC allowed to offer only one fund per category.. Value funds screen stocks using financial ratios like P/E and P/B to find shares priced below their fundamental worth and hold until the market corrects the gap.. Contra funds take a behavioural investing approach — buying sectors or stocks that are currently out of favour, betting that the pessimism is temporary and prices will recover..

What you should do: Check your existing mutual fund portfolio on your app — if you already hold a flexi-cap fund, you may have significant overlap with a value fund before adding one.. Compare 7-year and 10-year rolling returns (not just 1-year) for any value or contra fund you're considering — these categories need long horizons to show their edge.. Avoid allocating more than 15–20% of your total SIP to value or contra funds — treat them as satellite holdings alongside a core index or large-cap fund..

Value and contra funds often shine in the same market cycle — post-crash recoveries. Starting a SIP in either category during a broad market correction historically delivers the strongest 5-year outcomes.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.