Value Funds Compare

Additional Useful Information

• An investor can buy “Units” of these mutual funds. These units can be purchased at a price which is called the “Net Asset Value or NAV”. The NAV of these funds keeps changing daily depending upon the changes in the stock prices of the companies that are held by them.

• The investor can sell these units anytime at the NAV price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• The fund house which issues a Value Mutual Fund may offer two options to select from –
• IDCW Option – In this option, growth in the mutual fund value is distributed back to the investor’s bank account in the form of periodic payouts called “Dividends”. This payout could be monthly or quarterly.
• Growth Option – In this option, growth in the mutual fund value is invested back in the fund for further growth. The investor’s gains are in the form of higher NAV price of the units of the fund.

• If an investor buys units in a Value Mutual Fund and sells them within a certain short period of time, then the fund house may charge the investor, certain nominal fees, at the time of the sale. These charges are the “Exit Load”. This period of time is typically less than 1 year but varies from fund to fund. Typical exit loads can vary from 0 to 1% of the sale amount.

• Value Mutual Funds are considered a good investment option over the long term (more than 5 years).

Returns *

• Value Mutual Funds do not guarantee any returns. They are subject to market risks.

• If Value Mutual Funds are held over a 7-year period, they could generate returns ranging from 12.5% to 20% per year.

Risk Level

• Value Funds are categorized as high-risk investments since they invest in the equity stock market.

Liquidity

• When an investor sells (or redeems) units of these funds, the fund house will pay the sale amount to the investor in 2 working days (T+2).

Interesting Facts

• Value Mutual Funds require a lot of patience to be invested in. Stocks may take years to reach their intrinsic value. It is critical to have a long-term vision before investing.

• It is important to carry out due diligence on the fund manager before investing into value mutual funds as views between different fund managers will be varying and subjective.

Tax Implications

• Earnings received from Value Funds are taxable.

• When investors sell their Value Mutual Fund units, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Value Funds are sold within a period of 2 years from investment, the Capital Gains earned (called Short Term Capital Gains) are taxed at 20% of the gain.
• Situation 2 - If the Value Funds are sold after a period of 2 years from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain.

• There is no tax in case of “Capital Loss”.

• For any dividends/payouts received by investors from Value Mutual Funds, these amounts are added to their total taxable income and tax is required to be paid as per the tax slab.

Where To Invest

• https://scripbox.com/mutual-fund/value-funds

• https://www.etmoney.com/mutual-funds/equity/value-oriented/37