We all love a good sale. Whether it is buying branded clothes at 50% off or waiting for the “Big Billion Days” to buy a smartphone, we love getting high-quality items for a cheap price.
Value Investing is exactly that—but for the stock market.
While most investors chase “hot” stocks that are already expensive (like buying a jacket at full price), Value Funds look for quality stocks that the market has ignored or undervalued (buying that same jacket at a discount).
In this guide, we will decode the secret strategy used by legends like Warren Buffett and show you how to apply it to your portfolio using the Sanchay Karo App.
What is a Value Mutual Fund?
A Value Fund is an equity mutual fund that follows a “Value Investing Strategy.” According to SEBI norms, it must invest at least 65% of its assets in equity.
The core philosophy is simple: Buy low, Sell high.
Value Fund managers hunt for stocks that are trading below their Intrinsic Value (their true worth). These stocks might be cheap because:
- The sector is temporarily out of favor (e.g., Auto sector during a slowdown).
- The company is going through a temporary bad phase.
- The market has simply ignored the stock in favor of “trendier” names.
The manager buys these stocks cheap and waits. When the market eventually realizes their true worth, the stock price shoots up, creating massive wealth for investors.
Value vs. Growth: What’s the Difference?
To understand Value Funds, you must understand the two main investing styles:
- Growth Investing: Chasing companies that are growing fast (e.g., Zomato, Tesla). You pay a high price today hoping they will grow even bigger tomorrow.
- Value Investing: Buying established companies (e.g., ITC, Tata Power, PSU Banks) that are currently available at a “discount.” You bet on the price correcting itself to match the company’s real value.
Analogy: Growth investing is like buying a winning racehorse for a high price. Value investing is like finding a strong horse that is currently limping but will recover and win races later.
Why Should You Invest in Value Funds?
Value Funds offer a distinct advantage, especially when markets are expensive.
1. Margin of Safety
Since you are buying stocks at a discount, the downside risk is often lower. If a stock is already cheap, it has less room to fall compared to an expensive stock.
2. The Power of “Re-Rating”
When a Value stock starts performing, it benefits from two engines: Earnings Growth + PE Expansion (Market willing to pay more for the stock). This double boost can deliver exceptional returns.
3. Contrarian Gains
Value funds often invest against the herd. When everyone was selling PSU banks or Pharma stocks a few years ago, Value managers were buying. Those who invested then have made huge profits today.
Who Should Invest in Value Funds?
Value investing is not for the impatient. It requires:
- Patience (5+ Years Horizon): Sometimes, a “cheap” stock can stay cheap for a long time. You need to give the fund manager time for their thesis to play out.
- Contrarian Mindset: You must be okay with your fund underperforming temporarily when “growth” stocks are rallying.
- Experienced Investors: Ideally suited for investors who already have a core portfolio of Flexi Cap or Large Cap funds and want to diversify their strategy.
How to Invest with Sanchay Karo App (Step-by-Step)
Finding a true Value Fund is hard. Many funds claim to be “Value” but just buy popular stocks. Sanchay Karo’s AI helps you identify funds that truly follow the value mandate.
Step 1: Download the App
Start your bargain-hunting journey today.
- 📲 Android Users: Click to Download from Play Store
- 📲 Apple Users: Click to Download from App Store
Step 2: Complete Digital KYC
Sign up with your mobile number and verify your identity using PAN and Aadhaar. The process is paperless, secure, and takes less than 2 minutes.
Step 3: Explore “Value” Funds
- Open the App Dashboard.
- Go to the “Invest” tab -> “Equity”.
- Scroll to find “Value / Contra Funds”.
- You will see top-performing funds like SBI Contra Fund, Templeton India Value Fund, ICICI Prudential Value Discovery Fund, Bandhan Sterling Value Fund, etc.
Step 4: Analyze with “Smart Suggest”
Don’t just pick the winner of last year. Use our AI to check:
- Valuation Ratios: Is the fund actually buying cheap stocks (Low P/E ratio)?
- Consistency: How has the fund performed across different market cycles?
Step 5: Start SIP (Recommended)
- SIP (Systematic Investment Plan): Since Value investing requires patience, a SIP is the best way to accumulate units without worrying about market timing.
- Start with ₹1,000/month.
Pay securely via UPI or Net Banking.
Why Sanchay Karo?
- True-to-Label Check: We highlight if a Value Fund is drifting away from its strategy.
- Goal Alignment: Map this fund to a long-term goal like “Child’s Higher Education” so you remain patient.
- Family Portfolio: Track investments for your entire family in one view.
Conclusion: Price is What You Pay, Value is What You Get
Value Funds are the “hidden gems” of the mutual fund world. They may not be the most glamorous, but they have a history of creating substantial wealth for patient investors who understand the difference between Price and Value.
If you love a good bargain, you will love Value Funds.
Start investing in value today.
👇 Download Sanchay Karo Now:
📲 Android: Get it on Google Play 📲 iOS: Get it on App Store
Smart Investment. Simple Process. Secure Platform. 🔒📈
Disclaimer: Mutual Fund investments are subject to market risks. Please read all scheme-related documents carefully. Value Funds can be volatile in the short term and require a long-term investment horizon.
