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  • Category: Mutual Funds

    What are value mutual funds and how they are different from equity mutual funds?


    Have a query about mutual funds? Searching for details of value mutual funds? Find advice from experts here which will enable you to address your queries.

    There are wide variety of mutual funds available in the market. I have recently come across the term "value mutual funds". When I researched about it, I came to know that the fund invests in value stocks. Even equity mutual funds also invest in value stocks. Then how a value mutual fund is different from an equity mutual fund? Are the value funds more risky in nature?
  • #143643
    Depending on our prime expectations there are two broad categories of Mutual Funds.
    Value Funds and Growth funds.
    The funds which we have invested with the aim of getting regular income by way of dividend are called value funds. The market prices will not grow or increase substantially much i these funds.

    On the other hand growth funds are those where we expect growth in the market value , and the income is expected from the sale and resale exploiting the growth in price. Such stocks or funds will not be paying dividends or it will be very negligible in relation to the price.
    Growth funds are aimed at capital appreciation and value funds are for getting dividend.

    Generally the name of the funds may have the word 'value' or ' growth' and that will indicate which category fund it is.

  • #143653
    I am trying to provide the point-wise clarifications.

    (i) Value mutual funds are a type of equity mutual funds.
    (ii) Value mutual funds invest in undervalued stocks which have solid financial background. But the stocks are undervalued due to various other reasons like macro-economic scenario, apathy of investors, problems facing by the overall sector, etc.
    (iii) The fund managers strongly believe that those undervalued stocks would bounce back in 3 years or so.
    (iv) For investment in value-based mutual funds, patience is necessary. Furthermore, the investors are required to have faith on the ability of the fund-managers managing those particular funds.
    (v) Value-based funds are definitely riskier. But the returns in 3-5 years perspective are very attractive.

    Caution: Explosive. Handle with care.

  • #143662
    Value funds also invest in equity and the only difference in their nomenclature is based on the perception that they will provide a handsome return to the investor.

    Now depending upon the market whether blue chips are gaining or some selective sector stocks are gaining or value stocks are gaining the return to the investor will be determined. Unfortunately there are so many economical and political factors that it is difficult to foretell which category of stocks will perform better in the future.

    So the fund managers devise different schemes and different strategy of investing by dividing the portfolio in equity and debt and present these schemes to the investor with different scenarios and pros and cons of the schemes.

    Value mutual fund is also one such category.

    Knowledge is power.


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