What are value funds???

An equity mutual fund that primarily holds stocks that are considered to be undervalued both with respect to their earnings and book value, and that they are likely to pay dividends.

Most of the holdings in value funds hover around a less p/e ratio usually around (4 – 15). The book value of the holdings might more than 1.5 times the stock price though this can be a characteristic of an undervalued company, this is not the sole feature that astute value investors seek.

Most of the prominent and well established mutual fund family has a value fund component in which funds are often broken down by size. Where a fund family may include small-, mid- and large-cap value funds for investors to choose from. The premise of value investing is that the market has inherent inefficiencies that enable companies to trade at levels below what they are actually worth or otherwise called as Intrinsic value of the company. In theory, once the market corrects these inefficiencies, the value investor will see the share price rise.