A value fund is a mutual fund that picks stocks that are currently undervalued on the market. The fund will purchase stocks from companies that they feel are sound, but are currently unpopular. The fund will then hold onto the stocks until they increase in value and sell them for a profit. Often these stocks will still pay a healthy dividend, even though they are currently undervalued on the market.
A value fund is considered a conservative investment, because they slowly increase in price. Additionally the fees associated with the fund are lower, because the funds do not sell or buy stocks as often. The growth is at a steady but slow rate. Sometimes the stocks they pick do not grow as expected however.
Value funds may be one component of a mutual fund company's offerings. You may choose to put a portion of your investments or your 401K into value funds, since they are a more conservative investment. It is important to compare different value funds before you choose one for yourself. You should look at the long-term rate of growth on the fund.
