Value funds are a type of mutual fund or investment strategy that focuses on investing in stocks perceived to be undervalued or trading at prices lower than their intrinsic worth. These funds follow the fundamental investment philosophy that market prices of some stocks may not accurately reflect the true value of the underlying companies.

Value fund managers typically seek out stocks with strong financial fundamentals, attractive dividend yields, and stable earnings histories. They analyze various financial metrics such as price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and dividend yield to identify potentially undervalued stocks. By investing in these undervalued companies, they aim to capitalize on the market's tendency to eventually recognize and adjust the stock prices upward, potentially leading to capital appreciation for the fund's investors.

Value funds often appeal to investors looking for a more conservative and patient approach to investing. They believe that over time, the market will correct mispriced stocks, allowing value funds to outperform growth-oriented strategies during certain market cycles. However, it's essential to note that value investing carries its own set of risks, including the possibility that the market may not recognize the true value of the stocks, leading to potential underperformance.

In conclusion, value funds are investment vehicles that aim to uncover hidden gems in the stock market, targeting companies whose true value has yet to be fully appreciated by investors.