Choice - Best Stock Broker in India
  • About
  • App
  • Services
    Services
  • Research
  • Partners
  • Contact
  • Log In
  • Open Demat Account
  • Home
  • Blog
  • ...
  • Select MF: Growth vs Value Investing – What’s the difference?
  • ...
    Select MF: Growth vs Value Investing – What’s the difference?

Select MF: Growth vs Value Investing – What’s the difference?

Select MF: Growth vs Value Investing – What’s the difference?
  • Published Date: January 06, 2021
  • Updated Date: January 29, 2025
  • By Team Choice

All the Equity mutual funds in India can be divided in two major investment styles: Growth vs Value Investing. Even though there is a defined fund categorization by Sebi; every fund manager follows one of these two investment styles while creating a portfolio. Both of these investment styles have their own fanbase. So, what exactly is the difference between Growth Funds vs Value Funds? And which investment strategy will help in generating better returns? Let’s look at these investment styles in detail with this Select MF blog.

Growth vs Value Investing – The difference

Growth investing is an investment style that invests in stocks with stellar growth in earnings as well as the stock price. In most cases, the growth stocks are overpriced because the market expects the stock to do well fundamentally and hence buys the stock in anticipation. This drives the stock price higher compared to its earnings.

Growth stocks can outperform the market over the short term because of increased market interest and participation in it. However, the growth stocks are also highly volatile as they are sensitive to market news and negative sentiments.  Hence, any drop in the stock’s earnings or any unexpected news can take the growth stock down.

Value investing is basically investing in stocks that are fundamentally strong but undervalued. Fund managers following this strategy look for stocks that have good management, steady growth in earnings, and still unnoticed by investors. Such stocks end up being a multi-bagger i.e. they give multifold returns if invested in lower valuations.

Since the valuations of such stocks are already low, the potential risk in these stocks is low. As compared to the peers in the industry and overall markets, Value stocks tend to underperform over the short term. Hence, an extended period of underperformance is also a part of the value investing style. Once, the company gets discovered by border markets, it gives returns better than peers and benchmark.

Growth vs Value Investing in Mutual Funds

Broadly, most of the Indian Mutual Funds follow the Growth investment style. Sebi has created a separate Value category for mutual funds during its re-categorization exercise. Hence funds from this category have to follow the Value investment style. Here are some of the funds that follow Value strategy and their composition:

As you can see, all the funds are large-cap oriented. The fund managers have gradually shifted the exposure from mid and small caps to large caps as before the recent market fall mid and small caps were extremely volatile. Hence, heavy large-cap exposures have helped funds to protect the downside. But what about the performance? As a strategy, how did growth and value investment fared in the past?

We have compared the MSCI indices as they give an accurate representation of both Growth and value investment styles. Clearly, over shorter horizons Value strategy has outperformed growth because the market was volatile due to the Coronavirus pandemic. Ideally, Value strategy works out when the markets are very volatile and the economy is struggling. And the growth strategy works when the economy does well and the markets are stable.

Which investment strategy should you invest in: Growth or Value?

We have always emphasized on diversification of the portfolio of mutual funds. And, this diversification goes beyond the number of funds you should have in the portfolio. The mutual fund portfolio should consist of funds that have different investment styles. Hence, instead of investing in only one strategy, ideally, you should have a mix of both growth and value strategy.

Since Value strategy takes a long time to play out, the long term goals like retirement can have some exposure towards Value funds. Whereas, the medium to long term goals can have exposure towards the funds that follow growth strategy. This type of exposure can help the mutual fund portfolio across the various market cycles.

The exposure limits to both Value and Growth strategy funds will depend upon the investors’ risk profile and goals. You can reach out to our research team to get a suitable recommendation based on your requirements.

Recommended for you

loading

FII DII Data - Live Data

loading

10 Best SIP Plans For ₹1000 Per Month in 2025

loading

Pharma Mutual Funds – Best Option to Invest in 2025?

Invest in best pharma mutual funds in India for 2020 with Investica. Explore our top recommended pharma mutual funds to start investing today.

loading

Inverted Hammer Candlestick Pattern

Choice Financial Services
  • Services

  • Stocks
  • Mutual Funds
  • Wealth Planning
  • Insurance
  • Loans
  • Capital Advisory
  • Management Consultancy
  • Government Advisory
  • Tax Advisory
  • Institution
  • Company

  • Our Team
  • Investors
  • Calculator
  • Careers
  • Contact Us
  • Refer & Earn
  • FAQ’s
  • Resources

  • Fundamental
  • Technical
  • Blog
  • Pricing
  • Downloads
  • News & Media
  • Offer Document
  • Track Record
  • Investor Charter
  • Investor Grievances
  • Online KYC Updation
  • Quick Links

  • Open Demat Account
  • Corporate Demat Account
  • NRI Demat Account
  • Minor Demat Account
  • Market Prediction
  • Lowest Brokerage
  • Investor Charter
  • Investor Awareness
  • Watchout Investors
  • Investor's Advisory
  • Disclaimer
  • CEBPL Policies & Disclosures
  • CFPL Policies & Disclosures
  • Sachet Portal
  • Direct Pay-in

Choice International Limited , Sunil Patodia Tower,
J B Nagar, Andheri(East),
Mumbai 400099.

Monday - Friday : 08:30 am - 7:00 pm
Saturday : 10:00 am - 4:00 pm

+91-88-2424-2424

care@choiceindia.com

Google Play
App StoreApp Store
  • Made with in India
  • Privacy Policy
  • Terms & Conditions

Choiceinternational. CIN - L67190MH1993PLC071117
Choice Equity Broking Private Limited: SEBI Reg No. Broking - INZ000160131 ( BSE - 3299 ) | ( NSE - 13773 ) | ( MSEI - 73200 ) | ( MCX - 40585 ) | ( NCDEX - 01006 ).
Depository Participant SEBI Reg. No. - IN - DP - 84 - 2015 , DP ID CDSL - 12066900 , NSDL ID - IN301895. Research Analyst - INH000000222
Choice Wealth Private Limited: AMFI - Registered Mutual Fund Distributor. Association of Mutual Funds in India Registration Number - ARN - 78908.
Initial Registration: 15th March 2010 Valid Till: 14th March 2027.
Pension Fund Regulatory and Development Authority (PFRDA) - POPSE52022022 | Affiliated with POP HDFC Pension Management Company.
Choice Finserv Private Limited: NBFC Registration Number : N - 13.02216

Choice Insurance Broking Private Limited: IRDAI License No: 167, License Valid Till: 29-05-2025 | Category : Direct ( Life & General )
Registered Office: Choice International Limited, Sunil Patodia Tower, J B Nagar, Andheri East, Mumbai, Maharashtra 400099.
For any Grievances / Queries email at ig@choiceindia.com & care@choiceindia.com | Online Dispute Resolution Link: https://smartodr.in/login

Cautionary Message :

  1. Sharing of trading credentials – login id & passwords including OTP’s:- Keep Your Password/Pin and OTP’s private & confidential to avoid any misuse or unauthorised trades. Please ensure that you do not share it with any one.
  2. Trading in leveraged products like options without proper understanding, which could lead to losses
  3. Writing / selling options or trading in option strategies based on tips, without basic knowledge & understanding of the product and its risks
  4. Dealing in unsolicited tips through Whatsapp, Telegram, YouTube, Facebook, SMS, calls, etc.
  5. Trading in “Options” based on recommendations from unauthorised / unregistered investment advisors and influencers

Disclaimer:
1. *Investments in securities market are subject to market risks, read all the related documents carefully before investing.
2. In addition to client based business, we are also doing proprietary trading.
3. Brokerage will not exceed the SEBI prescribed limit.

Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014

Choice Equity Broking Private Limited (“CEBPL”) is a registered Research Analyst Entity (Reg. No. INH000000222 ) (hereinafter be referred as “CEBPL”). (CIN. NO.: U65999MH2010PTC198714).

Reg. Address: Sunil Patodia Tower, J B Nagar, Andheri(East), Mumbai 400099. Tel. No. 022-6707 9999 .

Compliance Officer: Mr.Prashant Salian. Tel. 022-67079999 - Ext-2310
Email- Prashant.salian@choiceindia.com

Grievance officer: Deepika Singhvi Tel.022-67079999- Ext-834.
Email- ig@choiceindia.com

Research Disclaimer: Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

© Choice International Limited. All Rights Reserved.