What is a Value Fund?

Value funds refer to funds that pursue stable recurring income as the basic goal. They mainly use large-cap blue-chip stocks, corporate bonds, government bonds, and other stable income securities as investment objects.

Value fund

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Value fund

Value fund, which is based on value-added stocks

The market performance of value investment shows a stable trend: advocating the theory of value investment, requiring investors to behave more robustly and not to venture, because the determination of the company's future cash flow has considerable uncertainty, which makes value investment the most important application The field is in traditional industries. In fact, Buffett, an investment guru known for value investing, invests mainly in stocks of traditional industries that he is familiar with.

The expression of value investment in the market is mainly to select stocks based on a lower level of P / E ratio and P / B ratio, and to distinguish it from the concept of growth investment. The well-known American fund evaluation companies morningstar and Lipper divide stock funds into three types of growth, balance and value according to the price-earnings ratio and price-to-book ratio. The main indicator to distinguish these three types of funds is fund holdings. The ratio of the combination's P / E ratio, P / B ratio and market average ratio, that is, the price-to-earnings ratio and P / B ratio of the stocks held by value funds are lower than the market average, while the P / E and P / B ratios of stocks held by growth funds The rate is higher than the market average.