Differences between Growth, Value, and Blend investment funds

There is a wide range of investment funds from which we can choose to curate your investment portfolio including monetary, fixed income, variable income, mixed, etc. In turn, we can distinguish between growth investment funds, value investment funds, and blend investment funds. This will depend on the type of company in which each fund invests.

Next, we are going to see the differences that exist between these three types of funds.

Value investment funds

value funds

The value investment funds invest in value companies that are deemed to be undervalued and trying to take advantage of the inefficiencies existing in the markets. This way, managers buy these companies when their value has dropped considerably (which are quoted at least 33% below the intrinsic value).

In principle, these types of companies have a low P/E ratio.

Also, value companies tend to belong to more mature sectors that have strong entry barriers. That is, defensive sectors such as electricity, food, pharmaceuticals… In addition, these companies tend to be more stable. The strategy that managers use in search of value companies is called Value Investing.

The value investing strategy has been used and developed by powerful global investors including Warren Buffet and Benjamin Graham who look into to companies and buy them out based on the stock intrinsic value and potential growth.

Examples of value investment funds (RV Global)

Here is a list of some funds that invest in value companies and their evolution along with some data.

  • DWS Invest CROCI Sectors Plus XC
    • 3-year return: 19.26%
    • Volatility: 19.40
    • Sharpe Ratio: 0.98
  • DWS Invest CROCI World TFC
    • 3-year return: 15.21%
    • Volatility: 15.78
    • Sharpe Ratio: 0.93
  • Dodge & Cox Worldwide Global Stock Fund EUR Accumulating Class
    • 3-year return: 19.90%
    • Volatility: 16.76
    • Sharpe Ratio: 1.10
  • Robeco BP Global Premium Equities I EUR
    • 3-year return: 17.52%
    • Volatility: 15.77
    • Sharpe Ratio: 1.02
  • Schroder International Selection Fund QEP Global Active Value C Accumulation EUR
    • 3-year return: 15.20%
    • Volatility: 13.14
    • Sharpe Ratio: 1.05

Growth investment funds

growth funds

The growth investment funds invest in growing companies. In this case, the current price of the share does not matter too much, but rather the future growth prospects (rapid sales or profit growth).

Managers looking for these companies do not focus so much on the intrinsic value and in principle have a higher P/E ratio than value companies.

These types of companies usually have capital appreciation with lot of competition and one of the sectors where we can find these types of companies is the technology sector.

Normally, these companies are more volatile than value ones, since they are not established in the industry and their income and/or profits are not so stable.

Examples of Growth investment funds (RV Global)

Next, I present a table that includes some funds that invest in growth companies and their evolution along with some data.

  • Baillie Gifford Worldwide Positive Change Fund Class B EUR Acc
    • 3-year return: 2.58%
    • Volatility: 22.32
    • Sharpe Ratio: 0.25
  • G Fund World (R) Evolutions RC EUR
    • 3-year return: 16.27%
    • Volatility: 16.29
    • Sharpe Ratio: 1.04
  • Baillie Gifford Worldwide Long Term Global Growth Fund Class B EUR Acc
    • 3-year return: -5.54%
    • Volatility: 25.25
    • Sharpe Ratio: 1.06
  • NN (L) Global Sustainable Equity – I Cap EUR
    • 1-year return: 8.30%
    • Volatility: –
    • Sharpe Ratio: –
  • Guinness Global Innovators Fund Y EUR Acc
    • 3-year return: 8.84%
    • Volatility: 18.31
    • Sharpe Ratio: 0.61

Blend investment funds

blend funds

Blend investment fund simply means that this type of funds will invest in both value and growth companies. Thus, we do not have to choose one type of company only, since these funds give us the possibility to combine the two investment styles. Let the manager decide when is the best time to invest in one or the other.

Examples of blend investment funds (RV Global)

Here is a list of some funds that invest in both growth and value companies and their evolution, along with some data.

  • Allianz Global Equity Insights A EUR
    • 3-year return: 12.09%
    • Volatility: 16.80
    • Sharpe Ratio: 0.72
  • Robeco Sustainable Global Stars Equities Fund EUR
    • 3-year return: 10.74%
    • Volatility: 14.25
    • Sharpe Ratio: 0.73
  • ERSTE Responsible Stock Global EUR I01 A
    • 3-year return: 9.42%
    • Volatility: 14.11
    • Sharpe Ratio: 0.68
  • JPMorgan Global Select Equity Fund C (acc) – EUR
    • 3-year return: 16.39%
    • Volatility: 15.31
    • Sharpe Ratio: 0.98
  • DPAM B – Equities NewGems Sustainable F Cap
    • 3-year return: 5.29%
    • Volatility: 19.02
    • Sharpe Ratio: 0.38

Conclusion

If you want a well-diversified portfolio and invest in the long term in investment funds, you don't have to choose just one type of stocks (growth or value). You can create an investment portfolio incorporating funds from both strategies. Another option is to choose to blend funds and let the manager decide the most appropriate time to choose to invest in one company or another.

While it is true that there are studies that indicate that in the long term the value strategy is more profitable than the growth one, in times of economic growth stocks usually perform better than value ones. In 2021, we have a clear example of the good performance of tech companies, despite the fact that 2022 was a tough year for the stock market and both the second half of that year and 2023 have been marked by high inflation and the rise in interest rates, which have directly affected investments.

FAQs about Growth, Value, and Blend Fund

Is a Value fund a good investment?

Value fund tend to outperform it undervalued price in a bear market since they usually hold profitable stocks and they are not totally susceptible to lose because relevant and only needs time and the proper investment to start doing well again.

What is Growth fund investment

Growth fund is a diversified portfolio of stocks/shares that has capital appreciation as its first goal. The portfolio mainly consists of companies with above-average growth that reinvest their earnings into expansion, acquisitions, or research and development.

What is a Blend fund?

A blend fund (or blended fund) is a type of fund that includes a mix of both value and growth stocks. These funds offer investors diversification among these popular investment styles in a single portfolio. Blend funds are a particular case of a hybrid fund.

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