The Value Investing Approach in Mutual Funds
- What is Value Investing?
- Characteristics of Value Mutual Funds
- Pros and Cons
The Growth Investing Approach in Mutual Funds
- What is Growth Investing?
- Characteristics of Growth Mutual Funds
- Pros and Cons
Consult an Expert to Tailor the Right Mutual Fund Strategy for You!
Mutual Funds have become a go-to investment instrument for both beginner and experienced investors. This popularity stems from the ease of access and strong potential for diversification they offer.
However, not many people are aware that Mutual Fund investments can also be guided by specific strategies, such as value investing and growth investing. Here’s a detailed look at the value investing approach to help you better understand your options.
The Value Investing Approach in Mutual Funds
If you're looking for a more cautious, calculated investment strategy, value investing is worth considering. This approach focuses on medium- to long-term investments with the potential for stable returns.
● What is Value Investing?
Value investing is a strategy aimed at identifying stocks that are undervalued by the market. Investors compare a stock’s current price to its intrinsic value, and invest when the price is significantly lower.
To do this, investors rely on fundamental analysis, reviewing financial statements and the business's long-term strength. This approach requires patience, as gains often materialize over time.
Value investors typically ignore short-term trends and instead concentrate on the company’s fundamentals. The goal is to buy when a stock is undervalued and hold it until the market corrects its valuation.
● Characteristics of Value Mutual Funds
Value Mutual Funds focus on companies that are considered undervalued — often large, established firms temporarily facing business challenges.
Unlike growth stocks, value stocks tend to have lower volatility, making them appealing to investors who prefer to avoid large price swings. These stocks are also less frequently traded, as they require time to recover in value.
Returns from value mutual funds tend to be more stable and consistent in the long term. Investment decisions rely heavily on fundamental analysis rather than market hype or short-term speculation.
Investors select stocks based on financial data and company outlooks, aiming to reduce risk while maximizing long-term potential.
● Pros and Cons
One major advantage of value investing is its potential for strong long-term returns, especially when undervalued stocks are carefully selected. It’s a suitable strategy for long-term goals such as children’s education or retirement planning.
These funds typically diversify across bonds and shares of established companies, helping reduce the risk associated with relying on a single asset. The entry capital is relatively affordable, making it a good option for beginners.
You also don’t need to manage your investments directly — the fund is professionally managed by experienced investment managers. You may redeem your investment at any time based on the applicable Net Asset Value (NAV).
However, while value funds are generally stable, they still carry risks — especially during sudden spikes in interest rates or inflation. Bond prices within the portfolio may fluctuate with market conditions.
If investors sell bonds before maturity, they may incur losses. There’s also the risk of default if the bond issuer faces financial trouble.
Additionally, all gains are subject to taxes, which can reduce your net returns. That’s why it’s important to fully understand the risks before choosing value investing as your Mutual Fund strategy.
The Growth Investing Approach in Mutual Funds
Looking for an investment that grows over time? Growth investing might be the right strategy for you — especially if you're ready to commit your capital today in pursuit of greater potential returns in the future.
● What is Growth Investing?
Growth investing is an investment approach that focuses on stocks of companies experiencing rapid expansion. The emphasis isn’t on finding cheap stocks, but rather on identifying businesses with promising growth prospects.
Growth investors typically seek companies expected to outperform the broader market in terms of earnings and valuation growth. This strategy suits long-term investors who are comfortable with market volatility and understand that rewards often come after several years.
While it comes with its challenges, growth investing can offer substantial returns over time — making it an attractive option for forward-looking investors.
● Characteristics of Growth Mutual Funds
Growth Mutual Funds invest in companies with strong potential for long-term value appreciation. These portfolios usually include stocks from businesses undergoing significant expansion or innovation.
Because of this, the risk level is relatively high, as stock prices in growth portfolios tend to fluctuate more sharply. However, as these companies grow, the investment value can rise substantially.
This type of fund requires time to mature, making it suitable for investors who don’t need immediate access to their capital. Growth Mutual Funds are ideal for long-term financial goals, such as home ownership or retirement planning.
Investors who choose this strategy should be prepared for heightened market risk. But with the right approach, growth funds can deliver high returns over time.
● Pros and Cons
Growth Mutual Funds offer strong potential for long-term returns, making them a good fit for investors with extended financial goals, such as saving for a child’s education or retirement.
These funds are managed by professionals skilled at identifying high-potential stocks — which helps investors optimize their portfolio performance. Even with limited capital, investors can achieve diversification. Some funds even allow entry with relatively small amounts — starting from as little as tens of thousands of rupiah.
That said, the value of stocks in growth portfolios can fluctuate significantly. This investment type is better suited for those who can tolerate sharp market swings.
A solid understanding of the stock market is helpful, especially when prices dip — to avoid panic-driven decisions. Returns are not guaranteed and may vary significantly depending on market conditions.
Portfolio performance can also be impacted by external factors such as interest rate changes or unexpected economic crises. That’s why it’s crucial to fully understand the risks before choosing growth investing as your Mutual Fund strategy.
Consult an Expert to Tailor the Right Mutual Fund Strategy for You!
Choosing the right investment requires expert support to help you make informed decisions for the future.
With DBS Treasures Priority Banking as your trusted partner, your investments are managed by professional and experienced Investment Managers—ensuring optimal product performance.
You’ll also have access to expert financial consultants who proactively share up-to-date market analysis. With the right asset diversification strategy, risk can be reduced—giving you greater peace of mind in your investment journey.
To make things even easier, you can access the digibank by DBS Application, which simplifies your Mutual Fund transactions.
Through this mobile app, you can register your Single Investor Identification (SID) and carry out buy, sell, or switch transactions securely—anytime, anywhere.
You'll also benefit from curated market analysis delivered by our team of financial specialists, supported by Artificial Intelligence/Machine Learning (AI-ML) technology. These insights are tailored to your risk profile and portfolio needs, helping you spot timely opportunities across investment (Grow) and insurance (Protect) solutions—so you can invest quickly and confidently, through your preferred channel.
With the right expertise, mutual funds can be managed to deliver optimal results. For a more strategic and confident investment experience, DBS Treasures Priority Banking is your trusted partner. Visit this page to learn more!
