An investor who marches to a different drummer is sometimes described as a contrarian. In other words, if most investors are buying large-cap growth stocks, a contrarian is concentrating on building a portfolio of small-cap value stocks.
This approach is based, in part, on the idea that if everybody expects something to happen, it probably won't.
In addition, the contrarian believes that if other investors are fully committed to a certain type of investment, they're not likely to have cash available if a better one comes along. But the contrarian would.
Contrarian mutual funds use this approach as their investment strategy, concentrating on building a portfolio of out-of-favor, and therefore often undervalued, investments.
- Browse Related Terms: Contrarian, equity fund, Global fund, Growth and income fund, income fund, International fund, Investment objective, Portfolio turnover, Prospectus, Real estate investment trust (REIT), Tax-efficient funds, Transparency, Turnover ratio, Value fund, Vulture fund, World fund