Value-oriented funds have sappointed investors in recent times. Their category average return has been a meagre 1.02 per cent over the past one year and 3.55 per cent over the past three
years. However, their category average return over 10 years remains a respectable 11.14 per cent, which is one reason why investors should retain faith in this category despite its poor showing in recent years.
What are value funds?
Value fund managers purchase stocks they believe are currently priced at lower levels than they are worth. They are different from growth fund managers, who primarily invest in stocks that have high earnings growth potential. While value fund managers shy away from investing in stocks carrying high valuations, growth fund managers are prepared to pay a high price. The latter believe that the future earnings growth potential of these stocks justifies their lofty valuations.
Many stocks get beaten down when negative news hits their companies. Many investors exit such stocks in such times. Value fund managers use these opportunities to buy such stocks if they believe that the company will be able to overcome its difficulties.
The main risk in the value style of investing is, what is known as a value trap, which is the error of investing in a cheaply priced stock that is of poor quality. Such a stock is never able to overcome its difficulties. Its valuation keeps falling, causing losses to those who invested in it.
Different styles of value fund managers
Bu hikaye Investors India dergisinin Nov 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Investors India dergisinin Nov 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
ASK THE EXPERT
Ques. One of my friends told me that your company provides detailed Retirement plans. I want to know what is the procedure to get my Retirement plan. I will be retiring in March 2025. R.P Gupta, Noida
How to Naturally Reverse Fatty Liver Disease
The liver, located on the upper-right side of the abdomen, is the body’s largest internal organ and plays a critical role in detoxifying the blood and processing nutrients.
Banking sector which has underperformed in the last two years, now offers a favorable risk-reward profile
Do you think the market is overpriced? Is yes, should investors refrain from investing in index schemes at the current valuation?
India will continue to enjoy benefits of a close US relationship and trade will continue to grow
Q1. The US elections are said to be one of the closest till date, what impact will the election of a Republican / Democratic party have on the US economy and how is that going to affect India in the short as well as the long term?
Understanding Momentum Funds
Momentum funds are a type of investment fund that focuses on companies experiencing positive momentum in factors such as earnings, revenue, and stock price movement.
Risks and opportunities associated with Small Caps
Small-caps are a stock-picker’s paradise.
How to navigate your portfolio through bull market a
Indian equities have been in a bull run for the past four years.
Choosing mutual fund schemes depending on your age to achieve life goals
The choice of mutual fund (MF) scheme might be influenced by one’s risk profile or age.
Thematic Fund Or Sectoral Fund, Which Fund Suits You?
A thematic fund is a type of mutual fund that focuses on investing in companies based on specific themes or trends.
Be Kind To Your Kidneys
The kidney is a vital organ in our body which is four inches long and two and a half inches in width.
