Volatility Tests Patience. Value Funds Reward It.

Volatility has a way of testing everyone’s investing temperament. One week, markets are cheering a rate pivot. The next, they are spooked by geopolitics, earnings misses, or a single data print. In that noise, investors often confuse movement with meaning, and end up making the most expensive decision of all: exiting their investments at the wrong time. This is precisely where value funds earn their place in a long-term Mutual Fund portfolio. Not as a fashionable style tilt, but as a discipline that keeps you invested when emotions are pulling you out.[EasyDNNnews:PaidContentStart]

Value investing’s edge in turbulent phases is rooted in simple maths. A long-run study by the Brandes Institute observed that value stocks tend to be less exposed to extreme volatility, and have delivered better risk-adjusted outcomes than growth in the years following high-volatility episodes. The welldocumented ‘value factor’ (the High Minus Low, or HML, premium in the Fama-French framework) captures this: paying a reasonable price for cash flows and assets reduces the chance that optimism is already priced in.

Two forces make value funds steadier when sentiment turns. First, value portfolios often carry higher exposure to resilient, need-based sectors such as consumer essentials, healthcare, and utilities, where demand does not vanish because headlines get ugly. Second, value stocks typically have shorter ‘equity duration’ than growth stocks. When discount rates rise or risk appetite falls, long-duration growth valuations can crack faster because so much depends on distant future cash flows. Value, with nearer-term cash flows and tangible balance sheets, absorbs these shocks better.

Most importantly, volatility creates mispricing. Herd behaviour widens the gap between price and worth, and that dispersion is the hunting ground for value managers. In uncertain markets, value funds are not just Defence. They are a calm, repeatable way to buy good businesses when fear is doing the pricing.

Shashikant Singh
Executive Editor

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