What is the Difference Between value style and growth style?

When it comes to Equity Mutual Funds, they primarily follow two types of investment approaches, namely, Growth and Value Funds in India. The Growth Funds tend to be a little more aggressive and risky compared to Value Funds. However, both have the potential to offer better returns in long run. Both styles of investing do well in different market cycles. Growth generally tends to do well in a bull market, where valuations are high and indices are rapidly moving up. When the market is not moving at a rapid pace and there is broad-based growth and other positive economic factors, a value fund generally tends to do better.    

What is the meaning of Value Funds?

In Value funds, fund manager tends to invest money in stocks of companies which have good balance sheets; the financials are well consolidated. The cost price of the stock is not at a higher PE (Price to Equity) level. These companies are usually the ones that fall under the large-cap category. They have the potential to protect your investment against the downside risks of the market, thus offering a margin of safety.

Growth Style of Investing:

In the growth style of investing, fund manager chooses to invest in stocks that are doing better and display a promise or an indication to do even better in the near future. In the growth style of investing, fund manager generally tends to ignore the price or the PE value of the stock. These choices are mainly made based on the prevalent trends and market movements.

Markets are cyclical in nature. Whenever there is an ecosphere for value to do better, Value funds performs better. Factors such as GDP growth, earnings potential, etc., act as tailwinds and drive value style to optimal performance.

Investors should not worry about which style of investment to choose from. If one closely observes the market, one will be able to identify the trend and allocate to the prevailing style of investment.

Disclaimer: The views expressed here in this Article / Video are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The Article / Video has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of the Article / Video should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments. None of the Quantum Advisors, Quantum AMC, Quantum Trustee or Quantum Mutual Fund, their Affiliates or Representative shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary losses or damages including lost profits arising in any way on account of any action taken basis the data / information / views provided in the Article / video.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.