A lot of events like the demonetization, implementation of GST, and liquidity crisis in NBFC curtailed the prospects of the broader market. That is why it has become a trend for investors to go for momentum bets which is causing the polarization of the market growth. The investors are also looking for the best value mutual fund for investing their money. The covid-19 resulted in a market crash. That is why value funds have got a great opportunity to do well. If there are not any further economic shocks, the value funds will make a secure place for themselves in the market.
A Short Note On Value Mutual Funds
Value mutual funds are nothing but a type of mutual fund that always invests in stocks that trade at a rebate. This signifies that their innate value is higher than the market value. That is, you can be sure that you will get a good amount of returns in the young future. Investors can increase the value of their portfolio by picking the best value mutual fund for them. Value funds mean finding out the hidden gems of the equity market. The value funds enable the investors to pay the right price for the right stocks.
The SEBI guidelines say that value funds are equity-based mutual funds that proceed with the value investment strategy. They invest 65% of their assets in equity as well as equity-associated instruments with the flexibility to invest across market capitalization.
The List Of The Best Value Mutual Funds In India
- IDFC Sterling Value Fund
- ICICI Prudential Value Discovery Fund
- UTI Value Opportunities Fund
- Quant Value Fund
- DSP Value Fund
- HDFC Capital Builder Value Fund
- IDBI Long Term Value Fund
The Advantages Of Value Mutual Fund
- Improving Portfolio: It is a trend that the value fund invests in the undervalued stocks in various types of sectors. It helps to improve the portfolio of the investor with restricted exposure.
- Lessen downside risk: With the best value mutual fund, the downside is lower in comparison with the other equity funds. The effect of the bearish market does not fall so much on them as the stocks are already undervalued.
- High-growth potential: Value funds are capable of increasing the wealth of investors unimaginably. They can maximize the value of the portfolio in the long run.
- Route of the investment: There are two modes of mutual funds available in which the investors can invest their savings. The two modes are lump sum and systematic investment plans or SIP. In the first mode, the investors need to invest the whole amount in one go. But in the SIP mode, the investors are allowed to invest their money in a value fund through fixed installments at certain spans like monthly, quarterly, yearly, etc. For example, if the investor goes with the lump sum mode he has to pay Rs.1000 minimum, but with a SIP mode the investor is allowed to start a SIP with Rs. 100 only. The minimum amount may vary from scheme to scheme.
Things To Remember Before Investing In The Best Value Mutual Fund
Investors need to keep in mind a few things before investing their money in the best value mutual fund. They are as follows:
- Aim of the investment: The schemes differ from one another. If a scheme offers great returns in 3years the other might take 7 years to give you the maximum amount of returns. So the investors need to think about their requirements first. Then he should choose a value fund that will fulfill his needs.
- Risk factor: The risk factor is not always the same with every scheme. The investor should investigate the risk profile of the scheme before investing his entire savings into the best value mutual fund.
- The previous performance of a fund: The previous performance of a fund sets its effect on the upcoming plan. Investors need to investigate the historical returns of a fund before investing in this type of scheme again. But the past performance has no relation to the future. It depends on the stock completely.
Value mutual funds are gradually becoming a great way to make more money. The investors are running to invest their money in the best value mutual fund. But you need to examine the scheme carefully before investing your money, otherwise, it is completely beneficial for you.