Is It The Right Time To Invest In Value Funds?

Value is a precious asset and more so given today's precarious times. Having faith in your investment to create long-term wealth might be jolted due to a slump in the global markets, but it also presents the right opportunity to devote your finances to companies with good fundamental values. Vardan Pandhare decodes the importance of having a value fund in your portfolio

- Vardan Pandhare

Benjamin Graham, a renowned influencer investor of the 20th century, was the one who created the concept of value investing. Over the years some of the most successful investment gurus, including Warren Buffet, have used the same principle to create enormous wealth. However, with the emergence of financial syndicates offering various investment avenues, value investing is now not just limited to individual investors. In the last decade, mutual funds too have been following the principles related to picking value funds. In fact, in the post-pandemic era, market participants have started speaking more about fundamentals and valuations. Such discussions will only grow in the coming days since the market is presently grappling with a lot of uncertainties. No wonder then that value funds are back in the reckoning with several seasoned and new-age investors who want to learn more about it. To be fair, the last two years were kind for value investing admirers as only a handful of heavyweight stocks pulled the market higher. It was the time when value fund managers and experts were grumbling that no one was paying attention to valuations.

Especially so the first time investors who were ready to pay a premium to own a few blue chip stocks which were driving the market ahead. However, the trend was soon reversed and the bull phase started to lose steam in the second half of 2021. The markets, both globally and in India, were up and the surge was not driven by a few conglomerates. Many premium and discounted stocks participated in this broad-based rally. Thanks to these market movements, value funds also managed to stage a great comeback. But this market atmosphere taught investors a few important value-investing principles.

Decoding Value Funds