BAJAJ BROKING
Investing in mutual funds involves various strategies, each catering to different investor preferences and risk appetites. Among these strategies, value investing is a well-known approach, leading to the creation of value funds.
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Name
|
AUM
|
1Y Returns
|
|
|---|---|---|---|
ICICI Pru Value Discovery Fund (G) Equity|Value Fund Buy |
₹51111.87 cr. | 12.78% | |
|
Tata Equity P/E Fund - (IDCW-Trigger - Opt A - 5%) Equity|Value Fund Buy |
₹8228.41 cr. | 2.40% | |
|
Tata Equity P/E Fund - (G) Equity|Value Fund Buy |
₹8228.41 cr. | 2.27% | |
|
ICICI Pru Value Discovery Fund (IDCW) - Reinvestment Equity|Value Fund Buy |
₹51111.87 cr. | 12.76% | |
|
Tata Equity P/E Fund - (IDCW-Trigger - Opt A - 5%) - Reinvestment Equity|Value Fund Buy |
₹8228.41 cr. | 2.40% | |
|
Aditya Birla SL Pure Value Fund (IDCW) - Reinvestment Equity|Value Fund Buy |
₹5826.35 cr. | 4.15% | |
|
Tata Equity P/E Fund-(IDCW-Trigger-Opt B-10%) Equity|Value Fund Buy |
₹8228.41 cr. | 2.27% | |
|
Aditya Birla SL Pure Value Fund (IDCW) - Payout Equity|Value Fund Buy |
₹5826.35 cr. | 4.15% | |
|
Tata Equity P/E Fund-(IDCW-Trigger-Opt B-10%) - Reinvestment Equity|Value Fund Buy |
₹8228.41 cr. | 2.27% | |
|
Aditya Birla SL Pure Value Fund (G) Equity|Value Fund Buy |
₹5826.35 cr. | 4.15% |
A value fund is a type of equity mutual fund that follows the value investing strategy. This approach involves investing in stocks that are considered undervalued compared to their intrinsic worth. The intrinsic value of a stock is determined by analysing various factors such as financial statements, business model, competitive positioning, and management efficiency.
Value fund managers aim to identify such undervalued stocks, anticipating that their prices will eventually rise when the market recognises their true potential. These funds generally require a long-term investment horizon and are often preferred by investors looking for stable growth over time.
Value funds operate by selecting stocks that are available at a discount to their intrinsic value. The fund managers conduct in-depth research and analysis to identify these opportunities, considering factors such as earnings potential, debt levels, and market conditions.
Once these stocks are included in the portfolio, the fund holds them until the market corrects the price disparity, allowing investors to potentially benefit from price appreciation. Additionally, many value funds also invest in dividend-paying stocks, offering investors an added source of income.
Since value investing involves looking beyond short-term market fluctuations, these funds are typically suited for investors with a long-term perspective.
1. Long-term Investment Approach - Value funds are designed for investors with a long-term investment horizon. Since undervalued stocks may take time to realise their true potential, patience is key when investing in these funds.
2. Lower Downside Risk - Compared to growth-oriented funds, value funds may have relatively lower downside risk during market downturns. Since the selected stocks are already undervalued, they are less likely to experience drastic price falls.
3. Diversified Portfolio - Value funds invest across different sectors and industries to mitigate risks. This diversification helps in reducing the impact of volatility from any particular sector.
4. Research-driven Strategy - Fund managers of value funds conduct extensive fundamental analysis before selecting stocks. They look at financial ratios, historical performance, and future growth potential to make investment decisions.
5. Dividend Potential - Many undervalued stocks in value funds pay dividends, providing investors with an additional source of income apart from capital appreciation.
6. Higher Expense Ratios - Value funds generally require active management, as fund managers conduct deep research and analysis to identify undervalued stocks. This may result in slightly higher expense ratios compared to passively managed funds.
1. Deep Value Funds - These funds focus on stocks that are significantly undervalued based on their intrinsic worth. Such stocks may be experiencing temporary financial distress but hold strong long-term potential.
2. Dividend-paying Value Funds - Some value funds specifically invest in undervalued stocks that offer consistent dividend payouts. These funds appeal to investors seeking both capital appreciation and steady income.
3. Contrarian Value Funds - Contrarian value funds follow an investment strategy that goes against market trends. They invest in stocks that are currently out of favour but are expected to recover based on fundamental analysis.
4. Large-cap Value Funds - These funds focus on investing in undervalued stocks of well-established large-cap companies. Such companies usually have stable earnings and lower risk compared to mid and small-cap stocks.
5. Multi-cap Value Funds - Multi-cap value funds invest across large-cap, mid-cap, and small-cap stocks, providing a well-diversified portfolio. These funds balance stability and growth potential by selecting undervalued stocks from various segments.
Value funds provide a compelling investment avenue for investors who prefer long-term wealth creation with potentially lower downside risks. However, like all equity investments, they are subject to market risks, making it essential for investors to assess their financial goals and risk tolerance before investing.
Value funds may not be suitable for all investors, as they require a specific investment approach and risk tolerance. These funds are designed for individuals who prefer long-term investments and have the patience to wait for undervalued stocks to reach their full potential. Below are some investor profiles that may find value funds suitable:
1. Long-term Investors - Value funds work best for individuals with a long investment horizon, typically five years or more. Since these funds invest in stocks that are currently undervalued, it may take time for their prices to appreciate. Investors who can remain invested for extended periods without being affected by short-term market fluctuations may benefit from value funds.
2. Investors with a High-risk Appetite - Value funds are equity-based, meaning they are subject to market volatility. While value investing may offer relatively lower downside risk compared to growth stocks, these funds are still susceptible to stock market fluctuations. Investors comfortable with market risks and able to tolerate short-term losses in pursuit of long-term gains may consider value funds.
3. Investors Seeking Diversification - Investors looking to diversify their portfolio across different market capitalisations and sectors may find value funds beneficial. Since value funds invest in companies from various industries and economic segments, they help reduce exposure to risks associated with investing in a single sector.
4. Individuals Looking for Stable Growth - Value stocks typically belong to well-established companies with strong fundamentals. These stocks may not show immediate high returns but have the potential for steady long-term growth. Investors who prefer a more stable growth strategy instead of high-risk, high-reward investments may consider value funds.
5. Investors Interested in Dividend Income - Many companies that fall under value investing strategies pay dividends. Investors who prefer to receive periodic income through dividends while also benefiting from capital appreciation may find value funds appealing.
6. Investors Who Prefer Professional Fund Management - Identifying undervalued stocks requires expertise, market knowledge, and thorough research. Investors who may not have the time or expertise to conduct stock analysis but want to benefit from value investing can opt for value funds. These funds are managed by experienced professionals who analyse market trends, financial reports, and company fundamentals to identify the best opportunities.
7. Conservative Investors in the Equity Market - Compared to aggressive growth funds, value funds are often considered more stable as they invest in undervalued companies with strong fundamentals. While they still carry market risks, the strategy of investing in stocks at a discount may provide some level of downside protection during market downturns. Investors who are relatively conservative but still want exposure to equity markets may consider value funds.
8. First-time Investors Seeking Long-term Wealth Creation - New investors looking to build a long-term investment portfolio can consider value funds as an entry point into equity markets. Since these funds are actively managed, they allow beginners to invest in a diversified portfolio of value stocks without the need for deep market analysis.
Investing in a Value Fund through Bajaj Broking is a simple and seamless process. Follow these steps to get started:
Step 1: Log in or Open a Bajaj Broking Account - Visit the Bajaj Broking website or download the Bajaj Broking app from the Play Store or App Store. If you are a new user, complete the KYC process by submitting your PAN card, Aadhaar, and address proof.
Step 2: Select the Value Fund - Navigate to the Mutual Funds section and search for Value Funds. Compare different funds based on historical performance, expense ratios, risk levels, and fund manager expertise. You can also use the mutual fund return calculator to estimate potential earnings before investing.
Step 3: Choose Investment Mode and Amount - Decide how you want to invest in the Value Fund:
Step 4: Complete Payment and Confirm Investment - Select your preferred payment method, such as UPI, net banking, or auto-debit for SIPs. Confirm the transaction and complete your investment in the chosen Value Fund.
Step 5: Track and Manage Your Investment - Monitor the performance of your Value Fund through the Bajaj Broking app. Investors can periodically review their portfolio and make adjustments based on market trends and financial goals.
By following these steps, you can efficiently invest in a Value Fund and work towards your long-term financial objectives.
Value funds offer several benefits to investors who have a long-term outlook and seek to invest in fundamentally strong companies at discounted prices. Here are the key advantages:
1. Potential for Long-term Wealth Creation - Value funds invest in stocks that are currently undervalued but have strong business fundamentals and growth potential. These stocks may take time to realise their intrinsic value, but once the market recognises their worth, investors may benefit from significant capital appreciation over time. This makes value funds an ideal choice for those looking to create wealth over the long term.
2. Reduced Downside Risk Compared to Growth Stocks - Since value funds invest in stocks that are already trading at lower prices relative to their intrinsic worth, they may offer a cushion against extreme market downturns. While no investment is risk-free, the lower valuation of these stocks may limit their potential for sharp declines during market corrections, making them relatively less volatile compared to high-growth stocks.
3. Diversification Across Sectors and Market Segments - Value funds typically invest in a diverse mix of companies across various industries, market capitalisations, and sectors. This diversification helps mitigate risks associated with investing in a single sector or company and ensures that the overall portfolio is more resilient to economic fluctuations.
4. Regular Dividend Income - Many value stocks belong to well-established companies with a consistent history of profitability. These companies often distribute dividends to shareholders, making value funds a preferred choice for investors who seek periodic income in addition to potential capital gains. Dividend payouts can provide a steady source of passive income, especially for conservative investors.
5. Professional Fund Management - Identifying undervalued stocks requires extensive research, financial analysis, and market expertise. Value funds are managed by experienced fund managers who analyse stock fundamentals, business models, and market trends to select stocks with strong long-term growth potential. This professional oversight helps investors make informed decisions without requiring deep market knowledge.
6. Potential for Market Outperformance in the Long Run - Historically, value investing has been known to outperform growth investing during specific market cycles. Since value stocks are purchased at discounted prices, they have room to grow as the market corrects their valuations. This strategy may lead to higher returns in the long run compared to other investment approaches.
7. Flexibility in Investment Options - Value funds offer investors the flexibility to invest either through Systematic Investment Plans (SIPs) or lump sum investments, depending on their financial goals. SIPs help in rupee cost averaging and reduce the impact of market fluctuations, while lump sum investments may be beneficial during market corrections when stock prices are lower.
While value funds offer significant benefits, they also come with certain risks that investors should be aware of before investing:
Before investing in a value fund, investors should carefully evaluate several factors to ensure the investment aligns with their financial goals and risk tolerance:
1. Investment Horizon - Value investing is a long-term strategy. Investors should have a time horizon of at least five years or more to allow sufficient time for undervalued stocks to reach their true market potential. Short-term investors may not see significant benefits from value funds due to their inherent nature of gradual price appreciation.
2. Risk Appetite and Market Volatility - Since value funds invest in equity markets, they carry a certain level of risk. While they may offer stability compared to high-growth stocks, they are still subject to market fluctuations. Investors must assess their risk tolerance before investing, ensuring they can handle short-term volatility.
3. Historical Performance and Fund Manager’s Expertise - Although past performance does not guarantee future returns, analysing a value fund’s historical track record can help investors understand how the fund has performed across different market cycles. Additionally, evaluating the fund manager’s experience and investment approach is crucial, as their ability to identify strong value stocks significantly impacts the fund’s performance.
4. Expense Ratio and Exit Load - Value funds come with management fees known as the expense ratio, which impacts overall returns. A lower expense ratio means higher take-home returns for investors. Additionally, some funds impose an exit load if investors redeem their units before a certain period. Checking these charges before investing can help optimise costs.
5. Portfolio Composition and Sector Allocation - Investors should review the underlying stocks and sector allocations of a value fund to ensure they align with their investment preferences. Some funds may have a higher allocation to specific industries, which could impact their performance depending on market conditions. Diversified value funds with broad sector exposure may reduce risk.
6. Taxation of Value Funds - Value funds follow the same taxation rules as equity mutual funds:
7. Market Cycle Consideration - Value investing tends to perform well during economic recoveries when undervalued stocks start gaining investor attention. However, during market booms, growth stocks may outperform value stocks. Investors should consider market cycles before committing to a value fund.
8. Flexibility and Investment Options - Investors should decide whether they prefer to invest through Systematic Investment Plans (SIPs) or lump sum investments based on their financial capacity. SIPs allow for gradual investments, reducing the impact of market fluctuations, while lump sum investments can be beneficial during market downturns when stock prices are relatively low.
Value funds are a category of equity mutual funds, and their taxation follows the standard tax rules applicable to equity-oriented investments. Investors need to be aware of the tax implications associated with capital gains and dividends when investing in value funds.
1. Short-term Capital Gains (STCG)
2. Long-term Capital Gains (LTCG)
3. Dividend Taxation
4. Securities Transaction Tax (STT)
5. Tax-saving Strategy for Value Fund Investors
The following table presents some of the well-known value mutual funds in India based on Assets Under Management (AUM), expense ratios, and past performance:
Top Value Funds in India
Fund Name | AUM (₹ Crores) | Expense Ratio (%) | CAGR 3Y (%) | CAGR 5Y (%) |
Bandhan Sterling Value Fund | 10,053.78 | 0.71 | 17.37 | 26.32 |
ICICI Prudential Value Discovery Fund | 48,987.78 | 1.00 | 21.84 | 26.17 |
JM Value Fund | 1,084.99 | 0.98 | 24.99 | 25.64 |
HSBC Value Fund | 13,674.92 | 0.78 | 22.72 | 25.45 |
Nippon India Value Fund | 8,563.55 | 1.16 | 22.17 | 25.23 |
Note: The above data is for informational purposes only and is based on a 5-year CAGR as of January 8, 2025. Investors should check real-time performance and fund details before investing.
Below is an overview of some well-known value funds in India, including their features, expense ratios, and investment requirements.
1. Bandhan Sterling Value Fund
The Bandhan Sterling Value Fund follows a value investing strategy to generate long-term capital appreciation by identifying and investing in fundamentally strong but undervalued stocks. This fund provides a well-balanced mix of large and mid-cap stocks, which helps investors gain exposure to stable yet high-growth potential companies. The fund manager strategically allocates assets to companies with robust financials, ensuring a strong portfolio.
With an expense ratio of 0.71%, this fund offers a cost-efficient way to invest in value stocks. It also provides flexibility to investors as it does not impose an exit load after one year, making it a suitable option for those looking for long-term investments. The minimum investment required is ₹5,000 for lump sum investments and ₹500 for SIPs, making it accessible to investors with varying financial commitments.
2. ICICI Prudential Value Discovery Fund
The ICICI Prudential Value Discovery Fund is designed to invest in stocks that are undervalued but have the potential for significant growth in the long term. It follows a disciplined investment approach to discover opportunities that can provide superior risk-adjusted returns. This fund is managed by experienced professionals who carefully analyse market conditions and company fundamentals to select the right stocks.
One of the key strengths of this fund is its diversified sector allocation, reducing risks associated with investing in a single industry. The fund has an expense ratio of 1.00%, which is in line with actively managed funds. Given its long-term focus, it is suitable for investors who are willing to stay invested for at least five years or more. The minimum investment requirement is ₹5,000, allowing investors to start with a relatively modest amount.
3. JM Value Fund
The JM Value Fund aims to invest in stocks that are available at a discount relative to their intrinsic value. This fund follows a disciplined value investing approach, ensuring that investments are made in companies with solid financials, stable earnings, and long-term growth potential.
The fund strikes a balance between large-cap and mid-cap stocks, which helps moderate risk while providing potential for strong returns. With an expense ratio of 0.98%, it offers competitive costs for actively managed funds. Additionally, investors benefit from higher flexibility, as there is no exit load after one year, allowing for easy liquidity if needed.
The fund is accessible to a broad range of investors, with a minimum lump sum investment of ₹5,000 and SIP options starting from ₹500 per month. This makes it an attractive choice for those who prefer systematic investments to take advantage of rupee cost averaging.
4. HSBC Value Fund
The HSBC Value Fund focuses on investing in high-quality stocks that are currently undervalued, aiming for long-term capital appreciation. The fund is actively managed by HSBC Global Asset Management, leveraging its expertise in global and domestic markets to identify value stocks with strong fundamentals.
One of the standout features of this fund is its diversified portfolio, which includes a mix of undervalued stocks across different sectors and market capitalisations. This diversification helps reduce risk and enhances the potential for stable long-term returns. With an expense ratio of 0.78%, the fund is relatively cost-effective compared to some other actively managed funds.
The minimum investment amount required is ₹5,000, making it accessible to investors looking for value-oriented investments. Given its balanced risk exposure, the HSBC Value Fund is a suitable choice for those who are looking for moderate risk but steady long-term growth.
5. Nippon India Value Fund
The Nippon India Value Fund follows a structured approach to value investing, focusing on companies that are trading at a discount to their intrinsic worth. The fund seeks to invest in fundamentally strong businesses with the potential for long-term capital appreciation.
This fund adopts a disciplined investment strategy, ensuring that only high-quality value stocks are included in the portfolio. With an expense ratio of 1.16%, it remains competitive within the actively managed value fund category.
One of the key benefits of this fund is its low entry requirement for SIPs, allowing investors to start with as little as ₹500 per month, making it accessible for those who prefer to invest gradually. For lump sum investments, the minimum required amount is ₹5,000. This fund is ideal for investors who are willing to stay invested over a long period to capitalise on the potential of undervalued stocks.
No Data Found
Value funds are equity-based and carry market risks. While they may offer lower downside risk than growth funds, they are still volatile. Investors with a low-risk appetite should consider hybrid funds that combine equity with debt for more stability.
Yes, value funds involve market risks as they invest in undervalued stocks. These stocks may take time to appreciate, and their performance depends on economic conditions and market cycles. While they are relatively stable compared to high-growth funds, they are not risk-free.
Value funds are ideal for long-term investors who can tolerate short-term fluctuations. They suit individuals seeking stable capital appreciation, dividend income, and a diversified portfolio. Investors with a five-year or longer investment horizon and moderate-to-high risk appetite may find value funds beneficial.
An example of a value fund is the ICICI Prudential Value Discovery Fund, which invests in undervalued stocks with strong fundamentals. Other well-known value funds include Bandhan Sterling Value Fund, HSBC Value Fund, and Nippon India Value Fund, all of which follow a disciplined value investing approach.
Value funds can be a good option for long-term wealth creation. They invest in fundamentally strong but undervalued companies, offering potential for stable returns. However, they require patience, as stock prices may take time to correct. Investors should assess their risk tolerance and investment goals before investing.
Historically, value funds have delivered annualised returns of 12 to 20 percent over the long term. However, returns depend on market trends, stock selection, and economic conditions. Past performance does not guarantee future results, so investors should review historical trends and market cycles before making an investment decision.
Value funds face risks such as market volatility, prolonged undervaluation, fund manager selection errors, and liquidity issues. Some stocks may take years to gain value, requiring investor patience. Economic downturns and sector-specific challenges may also impact returns. These funds are best for long-term investors willing to tolerate fluctuations.
Yes, value funds are taxed as equity funds. Short-term capital gains (within one year) are taxed at 15 percent. Long-term capital gains above ₹1 lakh per year are taxed at 10 percent. Dividends are added to the investor’s income and taxed according to their applicable income tax slab.
The investment amount depends on financial goals and risk tolerance. Most value funds allow lump sum investments starting at ₹5,000, while SIPs begin at ₹500 per month. Investors should diversify their portfolio and allocate funds based on long-term financial planning and investment strategy.
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| Debt Funds |
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Mutual Fund Sub Category |
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