Value Stock Fund Overview

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Value Stock Fund Overview

Overview: These funds invest in value stocks, which are stocks that are cheaper than other stocks in the market.

To whom do they benefit? When stock valuations rise from time to time, many investors wonder where they can put their investment funds. Value stock funds may be a good choice. Value stock funds are suitable for investors who are comfortable with the volatility of stock investments. Equity fund investors also need to have a longer investment horizon, at least three to five years, to ride out any fluctuations in the market.

Risk: Value stock funds tend to be safer than other types of stock funds because they are cheaper, but they are still made up of stocks, so they can fluctuate much more than safer investments like short-term bonds.

Value stock funds are also not government insured.

Returns: As interest rates rise, growth stocks become less attractive in relative terms, and value stocks tend to perform better.

Many value stock funds also pay dividends, so this is an added attraction for many investors.

Where to get them: There are two main types of value stock funds: ETFs or mutual funds. Most major online brokers typically offer ETFs commission-free and with no minimum purchase requirements.

However, mutual funds may require minimum purchases, and online brokers may charge transaction commissions, although the best mutual fund brokers can offer thousands of dollars without paying transaction fees.