Value, Growth or Both?

The world of mutual fund investment is broadly spread between two styles, value and growth. There are other types that lie in-between. The battle between these two broad categories of investments has been on for years. The proponents of these two types of investments present their own share of statistics to prove their point. While growth funds invest in companies that offer strong earnings growth, value funds have portfolio of stocks that appear to be undervalued in the marketplace. There are studies that show that value funds have remained laggards for extended period of time, but they often bounce back from their lows. Once they are back in the reckoning, they not only cover the lost ground, but also do more.

Our cover story this time investigates the 'value funds' in detail. We found that value funds do well in early economic recovery and even in the longer period. However, these funds might lag in their performance during the bull market. Therefore, your mutual fund portfolio's core holding, which forms the foundation of your investment, should have both these types of funds, that is, growth and value. This will help your portfolio to perform in the entire economic cycle as value and growth funds perform in different phases of the market cycle. Your returns will be hypothetically shielded by the market volatility and you will have smooth investing experience.

However, if you are new to investment and are risk-averse, you can start with hybrid funds. These categories of funds invest in two asset classes, that is, both equity and debt in different proportions. Depending upon your risk appetite, you can opt for any one of these funds. One of our special reports unravels hybrid funds in detail.

Hope this issue will help you make profitable investment decision. Please do write to us with your suggestions and feedback.