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What’s better in uncertainty – value or growth funds?

Amid market volatility due to macroeconomic challenges, rising interest rates and inflation, investors may wonder whether to consider mutual funds that invest in value stocks or stocks. growth. Financial advisors, however, say both are integral to the portfolio.

A growth stock is a dynamic stock, which was bought for Rs 100 but is expected to rise to Rs 200; while a value stock is bought at Rs 50 although its intrinsic value is Rs 100, Nisreen Mamaji, founder of MoneyWorks FS, told BQ Prime’s Niraj Shah.

“Generally, when markets are greedy, growth stocks are favourable, but when investors are scared, value investing will be more in line with sentiment,” Mamaji said.

According to Yogesh Kalwani, head of investments and family office at InCred, investors do not have a specific fund if they are looking to implement a “pure value style”. “The biggest dilemma for an investor is that there aren’t too many purist value fund propositions on the street.”

Kalwani calls “a growth strategy” something that has paid off in the long run. He admits that currently there is “much more mixing in the availability of mutual funds and the options available to investors.”

According to Mamaji, mutual fund options are “always a mix because there is no value without growth.” Its main recommendations are the ICICI Prudential Value Discovery Fund, which performed well in the three-year, five-year and 10-year segments.

UTI Value Fund, Nippon India Value Fund and L&T India Value Fund are also good options, as they outperformed in the 10-year category, but not as well in the 3-year and 5-year categories, Mamaji said.

InCred Wealth’s top picks are the SBI Focused Flexi Cap Fund, which has a long track record; and the UTI Flexi Cap Fund, which has seen some underperformance over the past six months, although Kalwani remains positive on this.

“As a mix of style and growth at a reasonable price, these two funds tend to generate returns over a longer time frame and through market cycles,” he said.

Are small fund houses a good bet?

Some funds owned by smaller fund companies get higher ratings and rank in equity categories.

According to Kalwani, InCred Wealth does not consider funds from houses with assets below Rs 15,000 crore.

He recommends the Parag Parikh Flexi Cap Fund of the PPFAS Mutual Fund, which has about Rs 20,000 crore in assets. “It’s growing fast and also investing in the equity side, and the fund has done extremely well.”

The PPFAS fund is also Mamaji’s choice among smaller funds. “Three-year and five-year beta has been low, it’s less than one, but alpha on benchmarks is 8.21% for three years; for five years, it is 6.47%; and the performance over three years was 22.69% for Parag Parikh.