What is a "Value" fund, and how should it be used in a 401k portfolio?

When a mutual fund's type is listed as a "Value" fund, what does that mean? My 401k plan offers the Sound Shore fund, which is listed as a Large-cap Value Fund. It's been performing well this year, but as a 22-year old, I'm wondering if I should put some money in that, or stick with the growth funds most people recommend for us young ones.

So, what is a value fund, and should I have it in my 401k portfolio as a 22-year old?

A value fund invests in companies that are undervalued on whichever valuation metrics that portfolio manager looks at. Companies in the portfolio would most likely be pretty boring companies to most people. You would not find Google or Yahoo in a value fund, but you might find Microsoft in there. Right now, it wouldn't surprise me to see a lot of financial companies and utiliites in a value fund portfolio. The companies in those portfolio genertally paying good dividends as well. That type of fund is great for the long term and for a 22 y/o's 401k acccount, its a brilliant idea. Good Luck

A value fund invests in stocks that they think are selling at a low price. They think they will go up because they are a good co. that is just down now. It is good to have in your 401k. They do well over the long term. You need a few funds. Equity Income, Growth and International funds.

good answers, i just want to add that since the companies that the fund buys are cheap, or undervalued-they "shouldnt" drop as much if a bear market comes, because they arent artificially inflated pricewise,they are already cheap

from the other answers you now know what a value fund is. Now to address the question of should you be investing in one. For the past 5 years value funds have way outperformed growth funds. Some by 3x. That should help answer your question about whether you should invest in them or not.

According to the theory of portfolio allocation, one can improve ones return and reduce ones risk by investing in a diverse mixture of different types of investments. For example some growth stocks, some large cap stocks, some value stocks, some foreign stocks, some small cap stocks etc. And also accross industries. The theory has proven through back verification to improve returns by at least 1.5% and to reduce risk significantly.