Understanding different investment styles of the fund manager to ride through volatility

Equity investment is a nonlinear investment and there are broadly two major styles of Investment which includes GROWTH and VALUE and some of the funds will have a combination of both. To provide a margin of safety, asset management companies also adopt an investment style which is the Growth at Reasonable Price (GARP) style.

In the last 2 years, Growth oriented investment style has not done well wherein Value style investment has done well during the global uncertainty caused by Ukraine-Russia Crisis and the high inflation environment. Hence, some of the growth-oriented portfolios like UTI FLEXICAP FUND, and Parag Parikh Flexicap fund has underperformed in spite of quality stocks in their portfolio and in the same period, Value style (where companies which are undervalued and provide a margin of safety) have outperformed the indices in a big way with the funds like ICICI Prudential Value Discovery fund and Templeton India Value fund.

But in the long run say above 10 years, both growth and value styles of investing will converge and provide a good investment experience. Hence, having different investment styles adopted by the fund managers will help investors to have wide diversification within the asset class.

It is very important to be aware of the cycles of Equity investment and Shifting of Cycles is not suggested in the short period. Equity Fund should be evaluated only if it is underperforming the benchmark indices over a period of time.

To understand your risk profile, identify the category of funds based on your goals, do consult a financial planner who can help you choose the right fund based on your investment tenure.

Happy to help in your investment journey with equity mutual funds.

Venkataramana C
Certified Financial Planner
Growth By Discipline. Helping You Get Where You Want To Be. Get in touch today!
Call 99520 19605
https://championwealthcreators.in/
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