Baroda BNP Paribas Mutual Fund announced the launch of its Baroda BNP Paribas Value Fund on May 17, 2023. This mutual fund is unlike most mutual funds launched to date as it focuses on the “value investment style” as opposed to the “growth investment style”.
The scheme’s investment goal is to achieve long-term capital appreciation from a diversified portfolio of mostly equity and equity-related assets through a value investment strategy. However, there is no certainty that the scheme's investment objectives will be realized because it does not promise/indicate any returns.
Many investors are increasingly relying on the value investing style realizing how good stocks recover faster than others. The “growth investing style” wherein investors rely on momentum alone is gradually fading with market corrections proving how value-driven stocks drive stock market movement.
The new fund offer (NFO) has garnered interest among new investors looking to put their money in this fund hoping to gain maximum from the low net asset value (NAV) affixed at ₹10 per fund unit. A conversation with experts revealed how no investment decisions must be suggested and taken on an NAV basis and there are a lot many pros and cons that must be checked before putting money in any mutual fund.
Experts were inquired if investors must rely on value investing instead of growth investing in this time of increasing market volatility and similarly increased participation in mutual fund investments by retail investors.
Viral Bhatt, Founder, Money Mantra said, “I do not think investors must rely on value investing instead of growth investing. Both value investing and growth investing can be successful strategies, and the best approach for an individual investor will depend on their individual circumstances and risk tolerance. The best way to decide which investment strategy is right for you is to speak with a financial advisor who can help you assess your individual circumstances and risk tolerance.”
When asked how to decide between value investing and growth investing, Bhatt added, “There are some additional factors to consider when choosing between value investing and growth investing.
Your time horizon: Value investing is a long-term strategy, while growth investing can be a shorter-term strategy.
Your risk tolerance: Value investing is generally considered to be a less risky strategy than growth investing.
Your investment goals: If you are looking for capital appreciation, growth investing may be a better option. If you are looking for income, value investing may be a better option.
It is important to remember that there is no one-size-fits-all answer to the question of whether to invest in value stocks or growth stocks. The best approach for you will depend on your individual circumstances and risk tolerance.”
Most importantly, should investors following the value investing technique must invest in the Baroda BNP Paribas Value Fund NFO?
This question is important as most experts advise people against putting their money in NFOs. Rishabh Parakh, Chief Play Officer, NRP Capitals said, “The idea of value investing is to invest in undervalued stocks with the expectation that their prices will eventually increase and this makes it a high risk retried reward proposition and the time may run into years before the stocks give returns so one has to be cautious. If you can’t fathom the non-performance for a really long time then stick to normal funds.”
Investing is not the same as gambling. You cannot just rely on destiny to make money out of thin air. Deciding where and how to put your money to earn good returns, in the long run, mandates a fair understanding of personal finance and how money helps to create more money.