Wednesday, December 29, 2010

Value Fund

A value fund is a fund where the manager invests primarily in value stocks. Value investors believe that due to market inefficiencies and quirks in investor behavior that stocks can sometimes fall out of favor with investors unjustifiably, and that astute investors who buy stocks at lower valuations than their intrinsic or fundamental value can earn abnormal returns. Value investing is on the other end of the spectrum from Growth investing, where investors will seek out companies with the best prospects, paying relatively less attention to valuations, while Core investing is somewhat of a blend or middle ground. GARP or Growth At a Reasonable Price is a style which combines aspects of value based investing with growth focused investing. Warren Buffett of Berkshire Hathaway is a famous value investor.

Synonyms: Value investing, Value fund, Value oriented, Deep value, Value investor

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