New Delhi, Aug. 11 -- Value and contra funds have some similarities in their investment approach, but the two styles also differ in what they are actually betting on. When deciding which one to choose, investors need to understand how these approaches stack up against each other.

"All value is contrarian. Not all contrarian investing is value," says Sirshendu Basu, head of product management and strategy at Bandhan AMC.

"Value investing focuses on identifying businesses that appear mispriced relative to their fundamentals, while contra investing seeks opportunities where market pessimism may have created a disconnect between current sentiment and the underlying long-term potential of a business."

In practice, value investing starts wit...