Where are your value funds investing?
A value funds are the funds which follows a value investing strategy. These funds seek to invest in stocks which are undervalued on a price basis on fundamental characteristics. Value investing strategy is a method of investing in stocks with a lower trading value than its intrinsic value. This strategy considers the stocks which are undervalued by the market.
Investors who use this strategy strongly believes that the price discrepancy might be due to market overreactions to good and bad news which do not correspond with a company's long-term fundamentals. Therefore, they see these undervalued stock as an opportunity for investment at a lower price.
There are various mutual funds in the Indian mutual fund industry who follow this kind of strategy of investment. It is very important to know where these funds are investing, where they are betting more. For this we have analysed various value investing schemes. We have filtered the 5 value funds with a consistent performance.
According to our data analysis, currently the value funds are bullish on the sectors like Petroleum Products, Construction, auto ancillary, Banks, Software and Pharmaceuticals. Various new entrants to these funds in the last month are from these sectors. Also, these sectors collectively form around 50 per cent of the contribution of the total investment under all the 5 schemes.
Going ahead, among these schemes stocks of Tata Global Beverages, GAIL (India), ICICI Bank, Sterlite Technologies, Divi's Laboratories, Exide Industries, HCL Technologies remained favorites of fund managers and are preferred more. These funds employ around Rs. 2,235 crore investment and 3 schemes out of 5 have invested in these stocks. However on the sectoral basis stocks of Hindustan Petroleum Corp, Reliance Industries, Sadbhav Engineering, Kotak Mahindra Bank, HCL Technologies, Persistent Systems, Divi's Laboratories have attracted higher investment. Fundamentally, all these stocks carry an attractive intrinsic value which suggests a robust performance ahead.