What is value mutual fund
These are the funds with the investment in the stocks which are undervalued by the market. Their market price is lower than their true value .It is a long term investment ,where you cannot expect the price to be equal to its fair price in a single day.
The Fair price of the company is determined through various analysis. Now due to the market inefficiency the market price does not matches their fair price.
So, the fund manager investigates these inefficiencies and invest in those stocks that are undervalued so that when we buy these stocks at a less value and sell them at their true value we achieve a long term capital appreciation.
Why it is good for the investment
The primary advantage of Value mutual fund is that it gives you the high/exponential returns in a long run but it requires the time and patience to recognise its true worth.
- Long term growth- It offers the higher return and multiply the investors money over a long term.
- Volatility– It’s volatility is lower as compared to other types of fund. It is less affected during short term fluctuations in the market. It is much stable during turbulent market conditions and helps the investors to be in the market during downturns.
3.Diversification- In this to lower the risk, we can invest into various sectors and industries such as large cap, small cap etc. You can invest in other funds also like dividend funds, growth funds etc.
- 4. Accessibility and convenience – It gives you the liquidity and you can easily sell and buy the shares without having much knowledge at the end of the day.
- Investment options– It gives you the flexible options to invest whether you want to invest in direct plan or regular plan.
Factors to reconsider while investing
- Past performances– It is not the final call of any company as you cant predict the future of the company but you can analyse the consistency and relatability and can look at its long term performance and can compare them with their benchmark indices and peer funds.
- Expense Ratio– The expense ratio should be lower as it is considered as a fee that the fund charges each year to cover its cost. So, lower the expense cost ,more money is saved from your investment.
- Time– Choose the time horizon for your investment according to your needs and desires. Value investing is a long term strategy so if you want it for the short term you should reconsider your decision.
- Fund Size and Liquidity: Evaluate the size of the fund where larger funds offer the stability while the smaller funds is more quick and takes the advantage of the market opportunities. Make sure that the fund’s size and liquidity meet your investment preferences.
How to invest in the value mutual fund
- First select the platform for the investment like for example Groww , ET Money, PayTM Money etc.
- Create an account on any platform you like and sign up on that portal.
- Complete your KYC on it and open an new account.
- After completing, invest your money as per your choice in the value mutual fund.
Top value funds in 2024
| Name | 3 year return | 5 year return |
| 1. JM Value Fund | 30.67 % | 23.5 % |
| 2. ICICI Prudential | 28.52 % | 22.98 % |
| 3. HSBC Value Fund | 29.6 % | 22.4 % |
| 4. Nippon India Value Fund | 28.5 % | 22.5% |
| 5. Bandhan Sterling Funds | 27.44 % | 22.46 % |
The above given table shows some of the popular mutual funds and their returns in the years. You can analyse and can invest in the any of the above mutual fund as per your choice and needs.
Conclusion
If we consider all above points Value Mutual Fund is the better option to built your wealth over a long term while achieving the financial goals and market volatility. It also diversifies the investor’s money over time and gives us the good returns.
NOTE: Remember that investment in mutual fund requires patience and the undervalued stocks requires time to grow as they have the potential to grow and turn into a valuable asset in a long run.