Building a Long-Term Equity Portfolio with the Power of Value Fund

Equity investments have always been the go-to-route for investors to build long term wealth and cope with inflation to achieve their goals. It can however be challenging to find the right avenues to invest at the right time. People usually rely on stock tips from their friends or social circles to make investment decisions. However, this may not be the right strategy to sensible equity investing. In this article, let’s understand why a value fund may be a right option for investors diversified portfolio.

What are value funds and factors in favour of value funds

A Value fund invests in hidden gems of the market that are undervalued and have potential to provide risk adjusted returns when their true value is realized. This investing style uses a margin of safety approach to investing.

For those thoughtful investors that already have Value in your portfolio, we believe that it is a good time to hold on to it. It pays to invest with a time-tested true to label value fund to make the most out of the equity rally. Investors should continue to rely on a portfolio of quality businesses with very low balance sheet risk & at comfortable valuations.

A Value fund typically invests in a portfolio of strong fundamentals that are undervalued relative to historical trends. Generally, a Value Fund is likely to thrive in the following situations:

• Normalized interest rate environment and when there is a more broad-based economic growth.
• A combination of comfortable valuations and a potential for an earnings upgrade.

With a cyclical recovery in place, Quantum analysis suggests that value will continue to perform for the next few years.

How to safeguard investments through equity market swings

Equity markets are subject to drawdowns. This could be the result of change in sentiment, or market conditions. In a scenario when markets are on rallying, value investments that trade at lower price-to-earnings (P/E) multiples are better poised for risk adjusted returns over the long run. Likewise, during a market correction, when other equity funds are underperforming, a value fund generally falls at a lesser level due to lower PE multiples signalling a reasonably valued fund.

Why it’s a Good Time to hold on or Add Value?

For those thoughtful investors that already have Value in your portfolio, we believe that it is a good time to hold on to it. It pays to invest with a time-tested true to label value fund to make the most out of the equity rally. Investors should continue to rely on a portfolio of quality businesses with very low balance sheet risk & at comfortable valuations.

How to build a strong foundation for equity portfolio

With Quantum Long Term Equity Value Fund, investors can rely on a robust portfolio of quality stocks that are available at discounted prices. this true to value fund can provide buffer to withstand market shocks while generating risk adjusted returns in the long run. When the underlying companies realize their true worth, it will eventually translate to rewarding returns in the long run.

As a matter of fact, when compared with other equity investments such as small cap or mid cap investments, Quantum Long Term Equity Value Fund (Long Term Value with ‘Values’, acts as an anchor to your equity portfolio, delivering commensurate returns for the risk it takes. This is because Value funds are generally less susceptible to market swings and safeguard investors’ wealth during downturns.

To conclude, under the current circumstances where interest rate hikes have paused and inflation has eased we believe the resurgence of value investing is likely to continue.

When trying to build one’s portfolio, it is a prudent decision to hold or add value as part of one’s diversified equity portfolio to reduce market stress and capture opportunities across market cycles.

Above article is authored by Quantum.

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