Value Funds

Value mutual funds are a sought-after investment vehicle as they offer high returns and have high liquidity. These funds focus on identifying undervalued stocks or assets, i.e. those that are priced below their intrinsic value.


The undervaluation gives you, as an investor, the opportunity to capitalise on potential returns from the expected rise in the value of stocks. Value funds evaluate companies based on their earning potential, financial health and other key factors. 

In simple terms, they seek advantageous deals in the market and invest in assets that have the potential to become more valuable over time. To know more about value mutual funds, their benefits, and factors to consider before investing, read on.

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Features of Value Mutual Funds

Value funds are long-term investments with the aim of capitalising on the potential of undervalued stocks. Here are a few characteristics of value mutual funds that you need to know if you’re looking into investing in these funds.


  • Value mutual funds are a long-term investment

  • Value funds focus on undervalued stocks in the market by seeking out companies with stocks trading below their intrinsic value

  • They focus on fundamental factors like book value, earnings, dividends, etc.

  • Companies with strong fundamentals and stable cash flow are prioritised

  • Value mutual funds have the potential for higher returns

  • Undervalued stocks provide the margin of safety

  • Value mutual funds have exposure to general market and economic risks

Benefits of Investing in Value Mutual Funds

Check out the benefits that you can get by investing in value mutual funds.


1. Generates Wealth


Investing in value mutual funds can help you generate wealth over a long time. Value investing focuses on identifying undervalued stocks that have the potential for value appreciation over time. 


By investing in value funds, you can participate in the growth of these undervalued assets, which can help you earn greater returns over time.


2. Offers Higher Liquidity


Value mutual funds are generally open-ended, which means they allow you to buy and sell shares whenever you want. Value mutual funds offer higher liquidity than other investment options like real estate or other fixed instruments. 


This easy conversion of your funds into liquid assets provides you with convenience and flexibility. 


3. Affordable Investment


Value mutual funds often have a lower minimum investment amount as compared to other investment options. This makes them easily accessible for many since you do not need to make a large investment. You can start your value mutual funds investment with a relatively smaller amount of money. You can gradually increase your investment amount based on your finances and affordability.


4. Diversified Investment Portfolio


Your investments in value mutual funds are generally invested in a diversified portfolio of stocks and assets. Diversifying your portfolio helps spread the risk associated with investing across various securities and sectors. 


Investing in a value mutual fund exposes you to a variety of undervalued stocks and assets. This potentially enhances the risk-adjusted returns of your portfolio.

Key Parameters to Consider When Investing in Value Mutual Funds

Here are some factors that you should consider when investing in value funds.


1. Past Returns and Performance


Before finalising your investment, evaluating the past returns and performance of a value mutual fund is essential. You need to look for a fund with a consistent track record of providing good returns compared to other funds of the same type. 


Also, considering both short-term as well as long-term performances is essential to assess the performance and returns of the fund. This helps in knowing how the fund performs in different markets and conditions.


2. Total Cost of Investment


Paying attention to the cost of the investment that you will make in the value mutual fund is essential. These expenses may include various kinds of fees and charges along with the primary investment. 


Apart from this, look for value mutual funds with lower expense ratios. The best way to go is to compare the costs across different value funds and schemes and then opt for a fund that offers a good balance between performance and cost.


3. Effect on your Taxes


While making an investment, understanding the tax implications is also vital. In some funds, you need to pay tax on the returns that you get from the funds. Choosing a tax-efficient investment is the best way to save yourself from paying higher taxes. 


The tax you pay on your value mutual funds depends on your income slab and the duration of your investment.


4. Your Investment Goal


You need to clearly understand and define your investment goals before choosing a value mutual fund. This is because different investments provide different returns and other benefits like income generation, long-term growth, or capital preservation. 


Along with that, various investments have various maturity periods and withdrawal policies. You need to assess your requirements before deciding to choose an investment that aligns with your goals and investment duration.


5. Your Risk Appetite


Different investors have different tolerance for risk. So, understanding your risk tolerance is essential before choosing an investment option. Some value funds may have a higher risk level as compared to other funds and investments, and investing without understanding your risk tolerance may affect your finances in the future. 


Therefore, evaluate the risk profile, volatility and other factors of the fund before investing in it.


These strategies can help you make a smart investment decision and choose the best value mutual funds. You can find the right investment schemes for you on Bajaj Markets. 


You can start investing in all value fund schemes with low expense ratios and zero commission charges. The potential for significant returns with a focus on fundamentals makes value funds a well-rounded investment.

FAQs on Value Funds

Who should invest in value mutual funds?

Investors looking for long-term investments should invest in value mutual funds. This is because these funds have a longer duration, and generally, the returns on these funds are earned gradually over a period of time.

What are the risks associated with value mutual funds?

Is the initial investment amount required for investing in value mutual funds high?

What taxes are applicable on value mutual funds?


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