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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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What is a Value Fund?
A Value Fund is an equity mutual fund which follows the value principle of investing. The fund invests primarily in stocks of companies which are undervalued but which have string fundamentals. As such, when the companies grow, you can earn attractive returns on investment.
Advantages of Value Funds
Long-term growth potential
As undervalued companies reach their potential over time, your investments can yield attractive returns.
Portfolio diversification
Your portfolio comprises good quality stocks at low prices and is diversified across sectors with professional fund management.
Lower volatility risk
Since Value Funds invest in undervalued stocks, their prices dont fall considerably even when the market declines. As such, volatility risks are comparatively lower.
Margin of Safety
Investing in undervalued stocks provides a potential "margin of safety," as these stocks are often less likely to experience significant price declines compared to overvalued ones.
Explore Value Funds
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Value Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
ONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
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Understanding Value Funds
Table of Contents
What are Value Funds?
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A type of equity mutual fund , Value Funds are those which invest at least 65% of their portfolio in stocks and securities of companies which are undervalued but which have a good potential. Such companies are fundamentally strong which are currently out of favour with investors but which have the potential to deliver long-term returns.
What are the features of Value Funds?
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Diversified portfolio of undervalued securities across sectors
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The portfolio allocation is not regulated allowing fund managers allocation flexibility
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Suitable for investors with a long-term investment horizon of 7+ years
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Invest through SIPs or lump sum
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Earn tax-free returns up to ₹1 lakh if you stay invested
Who should invest in Value Funds?
Seasoned investors who don’t mind placing bets on undervalued companies
Investors who are aware of macro trends and can check the fundamentals of a company
Investors who are patient with the principle of value investing
Long-term investors who don’t have immediate financial obligations
What should be the investment horizon for Value Funds?
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Value Funds consist of stocks which are undervalued
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Such stocks take time to get noticed and raise their valuation
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As such, short-term investment is not recommended as the return potential is limited
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Value Funds are suitable if you have an investment tenure of 7+ years
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A long-term horizon also helps earn attractive investment returns
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You also get a tax benefit on staying invested for a longer tenure
What is the tax implication of Value Funds?
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Returns up to ₹1 lakh are tax-free if you stay invested for 12 or more months
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Returns exceeding ₹1 lakh are taxed at 10%
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For redemption within 12 months, returns are taxed at 15%
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
FAQs On Value Funds
The core of value investing lies in ‘buying when cheap, selling when expensive’. Value investors pick stocks trading at lower than their intrinsic value, and buy them with the expectation to sell them and earn profits in the long-term.
The intrinsic value of a stock (often called the real value) is essentially the anticipated value that takes long-term growth and not just current market value into consideration. Its calculation is based on fundamental analysis.
Value stocks are individual equities that are undervalued in the market with regard to intrinsic value, while Value Funds are mutual funds that diversify and invest in a portfolio of value stocks.
Before investing in Value Funds, you must consider the fund’s expense ratio and historical performance, the fund manager’s track record and investment strategy, and your own risk tolerance.
No, Value Funds are not risk-free. They carry stock specific risks as well as market risks (owing to the market being unpredictable at all times).
There is no lock-in period for Value Funds, you can redeem them as per your choice. However, try to align this decision with your long-term financial goals, market conditions, and other factors such as the exit load of the fund.
Yes, Value Funds are safe considering they have expert and credible fund managers managing them, plus SEBI regulations governing them and protecting you from malpractices.
As far as investment risks are concerned, they carry some amount of risk owing to market fluctuations and economic volatility.
Growth funds invest in companies that are expected to outperform competitors financially and provide you capital appreciation in the short term. Value Funds invest in undervalued stocks that have a long way to go and have the potential to give you stability and dividends in the long run. There are pros and cons of both, so make sure you carry out thorough research before making a choice.
Yes, you can passively adopt a value investing strategy through investing in index funds that track value-oriented indices.
Stay updated with economic trends, major world events, and assess overall market conditions from time to time. Regularly track your fund performance and review it in the context of current economic realities.
The biggest disadvantage of Value Funds is the potential waiting period for securities to realise their potential. Undervalued stocks might take a long time for their intrinsic value to be realised and to provide you with significant returns. Moreover, if the fund manager makes mistakes in stock selection, you might not get desired returns.
Value funds invest in stocks undervalued in comparison to their intrinsic, long-term value, seeking growth once the stock gets overvalued.
You should remain invested in value funds for at least 5 years to earn substantial long-term returns.
Past performance - Investment strategy is crucial to value investing. A good past performance indicates good foresight by the fund manager. However, past performance is not always an indicator of the future.
Investment horizon - The ideal investment horizon for value funds is 5+ years, so make sure it aligns with your investment goals. In the short term, value funds might not serve you as well.
Consider diversification - Look for a value fund that invests in diverse market caps
and sectors so that you don’t rely on a single one’s performance for your returns and spread your risks.
Types of Equity Mutual Funds
Funds Based On Market Capitalisation
Funds Based On Investment Style
Other Asset Class Funds
ETF Funds
Invest in funds listed and traded on the stock exchange
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Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
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Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
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Index Fund
Passively-managed mutual funds tracking a particular index
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