Grow Your Portfolio With These Best Value Funds in December 2024
Value funds are a type of mutual fund that invests in undervalued stocks. These funds aim to generate long-term capital growth.
The value theme has been ruling the Indian stock market for over a year. The mutuals that have been following the value investing approach gave better returns in the last year.
A value Investors select those stocks that are available at the cheaper valuations. If you are a new value investor, you should introduce yourself to this investing approach and its benefits and drawbacks. Mainly, investors are looking for stocks that are available at a discount to their actual or intrinsic value. In simple terms, this means the market has not identified the real worth of these stocks, and they are being sold at a cheaper price.
Value investors buy these stocks and wait for the market to notice their real worth. Once the market notices, when the stock prices rise, and value investors earn a profit. That’s why value mutual funds are recommended only for experienced investors.
The last few years were tough for value investors because a few large stocks were ruling the market. Investors and value fund managers object that no one is paying attention to valuations.
People were ready to pay extra to own the few stocks that were ruling the market, they said. But in 2021, the trend had changed. The market went up, and it wasn’t just a few stocks driving the rally. Most stocks joined in, making it a broad-based rally. Because of this, value funds also bounced back. However, the tough times taught investors some important lessons about value investing.
When you follow value investing principles, there may be times when your stocks do not perform well in the market. During those times, you just need to stick to your strategy and wait patiently. However, the past few years have shown that this is not always easy. Many investors lost patience and ended up selling their investments.
For this reason, it is sensible to limit your investments in value funds. As per the mutual fund managers, investors need to invest a maximum of 20% in the value funds. and the market may not pay a premium for value stocks always. When the market doesn’t pay much attention to stock valuations, value funds will underperform. If you are not willing to wait patiently, value funds may not be the right choice for you.
Here are the best value mutual funds to invest in December 2024:
- Invesco India Contra Fund
- Bandhan Sterling Value Fund
- Nippon India Value Fund
- ICICI Prudential Value Discovery Fund
