How you can blend investment styles with mutual funds

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A retired professor, 86, shows it's never too late to benefit from mutual funds

But the risk is that if the earnings growth of a company disappoints even slightly, there can be a sharp correction in its stock because the P/E multiples of such companies tend to be on the higher side due to estimates of higher earnings growth. Franklin India Flexi Cap Fund, ICICI Prudential Flexicap Fund and Parag Parikh Flexi Cap are some examples of value-oriented flexicap funds. The risk with value style is that there can be long periods of underperformance when the markets favour growth companies.

How to spot style Investment styles usually depend on the fund manager or the fund house. Parag Parikh MF, as a fund house, follows a certain style. Axis MF till recently largely followed a growth approach.

At the same time, it can depend on the fund manager. Some of them have a pronounced value or growth style. “Investors can identify the investment styles being followed in a fund by going through media interviews of the fund manager and also monitoring the fund’s portfolio to check what the fund manager is saying, [whether] he is following through with his stock selection or not," said Deepak Chhabria, chief executive officer and director of Axiom Financial Services.

He added that investors need to be careful because fund managers can talk about growth style, but actually follow momentum style of investing. Momentum investing is simply buying stocks that have shown an upward price trend and selling those that have shown a downward trend. The idea is to capitalise on the continuing performance of existing market trends.