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Should I continue my investments in value funds?

Dhirendra Kumar sheds light on the design and efficiency of value funds over the long term

I have five multi-cap funds which were doing well. But of late, their performance is okay. Besides, I have invested in two value funds - Quantum India Value Fund and ICICI Pru Value Discovery Fund. These two make up for 10 per cent of my portfolio; however, they haven't been doing well. My target date is my retirement date which is 13 years away from now. Should I continue my investments in the value fund or should I slowly start selling my investments in these funds and invest my money in the multi-cap funds?
- Sanjeev

With such a long investment horizon, I would say that you should just continue with these two value funds. You are likely to notice that the returns from value funds come from a very brief period of time, which the market recognises only at times. They are middle of the road funds - they haven't done very well but they haven't been disappointing either. I feel in a 13-year-long horizon, there may be two such periods when these funds will compensate for all the relative flips in between.

It is good to have style diversity in your portfolio. You may also have noticed that when the market actually fell, these funds fell less and they provided great stability as well.

Having said that, ICICI Pru Value Discovery has turned out to be a bit disappointing but I think with the kind of portfolio they are running, there is no compromise on quality. So, it should pay off. It is an act of belief. A 13-year time frame is good enough. Had it been one or two years, I would have suggested you switching. But with your time frame and understanding, I would say carry on.


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