Mutual Funds and Hedge Funds

Value funds invest in companies that are thought to be good bargains -- that is to say, they invest in companies that have low P/E ratios These are the stocks that have fallen out of favor with mainstream investors for one reason or another, either due to changing investor preferences, a poor quarterly earnings report or hard times in a particular industry. Value stocks are often the stock of mature companies that have stopped growing and that use their earnings to pay dividends. Thus value funds produce current income (from the dividends) as well as long-term growth (from capital appreciation once the stocks become popular again). They tend to have more conservative and less volatile returns than growth funds.