There is a popular saying among personal finance analysts “Focus on the stocks’ value than their prices”. This opinion is reiterated time and again when investors buy stocks unmindful of their valuations. While the bull run makes everyone rich, buying stocks at the right valuation ensures greater returns.
Take, for example, the ICICI Prudential Value Discovery Fund benchmarked against the Nifty 500 Value 50 Total Return Index has earned more than 13 per cent returns in the past five years. Though one may argue that this return rate is lower than the 15 percent returns that many expect, it is still good enough to beat inflation while enabling corpus creation in the long run.
This fund since its inception on January 01, 2013, has earned an absolute return of 342.40 per cent. Calculations reveal how a systematic instalment plan (SIP) of ₹1000 started on June 27, 2017 accumulated to ₹9,21,77.81, thus, hinting at roughly 53.63 per cent absolute returns over the past five years. The expense ratio of the underlying fund as of now is 1.25 per cent.
Those interested to invest in this fund must put in at least ₹1000 with every application, and in multiples of ₹1000 in further lumpsum purchases. The minimum purchase amount is ₹100 for those who wish to invest through SIPs. Thereafter, the investors can invest in multiples of ₹100 subject to a minimum number of 12 instalments.
There is an exit load of up to one per cent against redemption made within a year. The idea behind parking money in this fund is to avail from investing majorly in a well-diversified assortment of value stocks.
Returns comparison of several value funds highlight the following
Name of the fund | Two-year returns (in %) | Three-year returns (in %) | Five-year returns (in %) |
IDFC Sterling Value Fund | 46.25% | 17.75% | 12.40% |
Nippon India Value Fund | 31.86% | 14.45% | 12.35% |
UTI Value Opportunities Fund | 26.28% | 14.34% | 12.26% |
DSP Flexi Cap Fund | 22.55% | 13.08% | 11.97% |
Disclaimer: This article is for informational purposes only. Please speak to a SEBI-registered investment advisor before taking any investment related decision.