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There are two types of funds offered by fund management companies - growth and value funds. Growth funds focus on consistent growth of your investment, while value funds focus on providing regular returns on your investment.
What are Growth Funds?
Growth funds focus on growing your investment over the long run for the purpose of long term capital generation. Growth funds do not offer dividend payment. The money pooled by the investors earns returns which is reinvested in the fund itself on a regular basis. The risk associated with a growth fund ranges from moderate to high. Growth fund comprise of the following portfolios - large capitalization (cap), small cap, mid-cap, micro-cap, diversified equity funds, etc.
Large cap growth funds invest in the stock of companies with a large market capitalization. The companies can be either domestic or international. Large cap growth funds offer good returns in the long run.
What are Value Funds?
Value funds are mutual funds that offer dividend value depending upon their stock performance. Such funds are often considered by investors who want regular returns. Value funds do not give immediate returns but provide good dividends. Dividends are given once the fund is performing well and has successfully clocked a good profit. Such funds also have a huge potential for growth in the near future.
Both growth and value funds are ideal for an investment portfolio. The funds together balance out the risk associated with each other.
The key differences between growth and value funds are:
| Growth Funds | Value Funds |
|---|---|
| Focused on higher market growth for long term capital gain | Focused on substantial growth with higher dividend payout |
| Growth funds are expensive, especially large cap blue chip funds | Value funds are less expensive due to the low cost of the underlying stocks |
| Ideal for long term investment | Ideal for regular income |
| Returns are regularly invested back into the fund itself | Returns are distributed in the form of dividend |
| Growth depends on the performance of the fund, market volatility, fund manager, etc. | Dividends payable depend on the profits declared, if any |
| Growth funds carry more risk | Value funds come with less risk in comparison to growth funds |
| Growth funds are taxed as per LTCG while short term growth funds are taxed 15% flat. | Debt fund gains are taxed at 20% with indexation and 10% without indexation. |
| Type | Open Ended Fund |
| Investment Objective | To provide investors with opportunities for long-term growth in capital along with the liquidity of an open-ended scheme through an active management of investments in a diversified basket of equity stocks spanning the entire market capitalization spectrum and in debt and money market instruments. |
| AUM (Rs. Crores) | 23525.01 |
| Benchmark | S&P BSE 500 |
| Risk | High |
| Fund Manager | Sohini Andani |
| Return Rate 1 Yr (%) | 13.33% |
| Return Rate 3 Yrs (%) | 7.89% |
| Return Rate 5 Yrs (%) | 7.59% |
| Type | Open Ended Fund |
| Investment Objective | To generate long term capital appreciation from a portfolio of equity and equity related securities, generally focused on a few selected sectors. |
| AUM (Rs. Crores) | 30546.45 |
| Benchmark | Nifty 50 |
| Risk | High |
| Fund Manager | Harsha Upadhyaya |
| Return Rate 1 Yr (%) | 19.97% |
| Return Rate 3 Yrs (%) | 12.56% |
| Return Rate 5 Yrs (%) | 11.34% |
| Type | Open Ended Fund |
| Investment Objective | To generate long term capital growth from a diversified portfolio of predominantly equity and equity related securities, in the Indian markets with higher focus on undervalued securities. |
| AUM (Rs. Crores) | 7674.29 |
| Benchmark | S&P BSE 200 TRI |
| Risk | High |
| Fund Manager | Venugopal M, Vihang Naik |
| Return Rate 1 Yr (%) | 13.72% |
| Return Rate 3 Yrs (%) | 6.29% |
| Return Rate 5 Yrs (%) | 9.19% |
| Type | Opne Ended Fund |
| Investment Objective | To generate long term capital growth from a diversified portfolio of predominantly equity and equity related securities, in the Indian markets with higher focus on undervalued securities. |
| AUM (Rs. Crores) | 14728.88 |
| Benchmark | Nifty 50 |
| Risk | High |
| Fund Manager | Mrinal Singh |
| Return Rate 1 Yr (%) | 4.81% |
| Return Rate 3 Yrs (%) | 3.08% |
| Return Rate 5 Yrs (%) | 4.02% |
