Stock Analysis, IPO, Mutual Funds, Bonds & More

Should I sell Aditya Birla Sun Life Pure Value Fund?

If you have any mutual fund queries, message on ET Mutual Funds on Facebook. We will get it answered by our panel of experts.

ET Online|
Sep 09, 2019, 03.00 PM IST
Getty Images
Equity market
I am 24 years old. I have been investing since February 2018 in these schemes:
Aditya Birla Sun Life Focused Equity Fund
Aditya Birla Sun Life Pure Value Fund
Aditya Birla Sun Life Equity Advantage Fund

All these schemes are performing badly, but the second scheme is the worst performer. When I started investing, they were all high. But since then they have all gone down, resulting in loss.

Someone recommended me to stop investing money in them and put it somewhere else. But as per your online experts, I am supposed to keep buying now as the value is low now and I can even out the cost or average it. I have checked some other online sites which predict future performance and it shows that even after five years I might not get a profit in this particular fund.

Will you be able to advise me on this please? Should I continue to invest in these schemes? Or stop investing in the second one which has given me very high loss? Is it possible that the scheme might perform again in future?
-Neha Shetty

You are currently investing in a large cap mutual fund scheme, value-oriented scheme, and balanced advantage scheme. You cannot compare the performance of these schemes as they belong to different categories. A large cap mutual fund invests 80 per cent of the corpus in large cap stocks, whereas a value-oriented scheme invests in stocks with attractive valuations and wait for them to deliver. A balanced advantage scheme, on the other, invests in a mix of equity and debt, and dynamically balances their proportion based on key market ratios. They are meant for investors with different risk profile as they have varying risk and their performance will also differ greatly.

If you do not understand much about mutual funds, you should consult a mutual fund advisor immediately. Do not experiment with your hard-earned money.

Value-oriented schemes are meant for informed investors who want to build wealth without taking too much risk. These investors believe that every stock has an intrinsic value and the market would discover it sooner or later. They want to buy stocks that are undervalued by the market and wait for the market to discover its true worth to make profits. The strategy has its disadvantage as the stocks may be overlooked by the market for a very long time or the stocks may not be part of bull rallies. However, value investors don’t mind it as they believe in the strategy. Value-oriented schemes are likely to underperform in a bull market, but they may not fall sharply during a market downturn. However, value-oriented schemes have performed badly in the last year, some schemes like Pure Value Fund lost heavily.

The lesson for you: find out whether you understand the concept and it is in line with your investment objective and risk profile.

Lastly, do not go by someone’s recommendations and experts advice meant for others. You should always remember that the advice is always meant for a specified investor. His or her investor profile may not suit you.
Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service