Value funds are suitable for investors who have a good risk appetite. This kind of fun will invest in the company stocks that have been undervalued in price. Here, the portfolio of a good value fund has been discussed.
Value fund investment rationale
Value funds generally invest in the emerging listed companies in the equity markets. So, the small-cap investments will be considerable in value funds. It can give you better returns in long term, rather than large-cap funds. However, value funds will invest in various market capitalizations, to offer both security and better returns.
The rationale for value fund investments depends on the growth potential of companies: even if the stocks are undervalued at present and available in lower NAV, in long term these stocks can develop much more. In the future, with growth, the stock prices will be much higher than the present time, to give you good returns. Value funds can also offer dividends to investors.
IDFC Sterling Value Fund - Direct Plan
IDFC Sterling Value Fund - Direct Plan is one of the best value funds SIPs, given lucrative upside in long term. The IDFC Sterling Value Fund - Direct Plan's NAV is not very low at present, it stood at Rs. 97.19, and its fund size is Rs. 4437.46 Crore. The Expense ratio is 0.88%; which is lower than the category average is 1.18%. So, with a lower ER, this fund will be able to fetch you better profitability. ER is the percentage, which is calculated to show how much of your investment is being used for the fund's official management expenses. This mutual fund SIP has been rated with 5 Star by reputed rating agency Crisil.
Absolute and annualized returns
IDFC Sterling Value Fund - Direct Plan's SIP's absolute returns were best in long term lucrative. In the last 1-year SIP return stood at 21.79%, in the last 2 years it has fetched 71.48% returns, in the last 3 years it has given a 77.99% returns, and in the last 5 years, it has fetched 80.38% returns. Annualized returns of this fund's SIP were 61.71% in the past 2 years, and 42.45% in the past 1 year.
IDFC Sterling Value Fund - Direct Plan's absolute mutual fund returns are highest in 5 years terms. In the last 1 year return stood at 58.94%, in the last 2 years it has fetched 80.02% returns, in the last 3 years it has given 92.95% returns, and in the last 5 years, it has given a 139.69% returns. Additionally, in the past 1 year, the IDFC Sterling Value Fund - Direct Plan's annualized returns stood at 58.94% while the category average is 33.09%.
IDFC Sterling Value Fund - Direct Plan's Portfolio Turnover Ratio was 34.00%. This fund's equity holding is 96.14%, and 3.86% in others. The Fund's Large Cap Investments are 28.35%, Mid Cap Investments are 16.68%, Small Cap Investments is 38.69%, and 12.42% investments in other funds.
The top 10 equity holdings of the IDFC Sterling Value Fund - Direct Plan's are ICICI Bank, Minda Industries Ltd. (Auto ancillaries), Deepak Nitrite Ltd. (Chemicals), Radico Khaitan Ltd., Jindal Steel & Power Ltd. (Steel), Tata Consultancy Services Ltd., Axis Bank, HCL Technologies, CG Power and Industrial Solutions Ltd. (Power equipment), and Greenpanel Industries Ltd. IDFC Sterling Value Fund invests in total 54 stocks.
Other peer funds are Templeton India Value Fund - Direct Plan, Nippon India Value Fund - Direct Plan, ICICI Prudential Value Discovery Fund - Direct Plan, L&T India Value Fund - Direct Plan, etc.
Investing in equities/mutual funds/SIPs poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies and the author are not liable for any losses caused as a result of decisions based on the article.
(Data mentioned as on January 25, 2022)