When it comes to mutual fund investing, growth funds tend to dominate headlines. However, value mutual funds have carved out a unique space by focusing on stocks that are trading below their intrinsic value. These funds operate on the idea that markets often misprice companies and that patient investing in undervalued businesses can lead to strong returns over time. Over the last decade, several value mutual funds have proven that this strategy works, especially for long-term SIP investors who stayed consistent through market cycles.

A value mutual fund is designed to invest in fundamentally strong companies that are undervalued relative to their true worth. These funds aim to provide investors with a margin of safety while also allowing room for significant capital appreciation when the market corrects its pricing. According to the rules set by the Securities and Exchange Board of India, value funds must invest a minimum of sixty-five percent of their total assets in equity and equity-related instruments, and follow a value investing approach.

One fund that has stood out is JM Value Fund. Originally launched in 1997 with a different mandate, it was reclassified as a value fund in 2018. Since then, it has consistently delivered strong returns and has outperformed its benchmark over a ten-year period. Investors who committed to a monthly SIP of ten thousand rupees over this time would have seen their investments grow to around three point four nine lakh rupees, a significant jump from the initial one point two lakh rupees invested. This has been possible due to a portfolio focused on lower market cap stocks and a high-churn strategy that allowed it to take advantage of opportunities early.

Another strong contender in the value space is HSBC Value Fund, formerly known as L&T Value Fund. It has delivered an annualised SIP return of over twenty percent in the past ten years. The fund employs a mix of value and growth investing styles and has been managed by an experienced fund manager for over a decade. Its top holdings include prominent banks and financial institutions, and it has demonstrated consistent performance across multiple market phases.

Nippon India Value Fund also finds its place among the best-performing value funds. With an XIRR return of nearly twenty percent over the last ten years, it has rewarded investors who stayed invested despite market volatility. The fund uses a disciplined approach to avoid value traps and spreads its exposure across large, mid, and small-cap companies. Strong performance from banking and technology stocks has helped drive its gains in recent years.

ICICI Prudential Value Fund, previously called Value Discovery Fund, is another heavyweight in this category. It is the largest value fund in terms of assets under management and has delivered strong long-term performance. Known for its high-conviction investments in large-cap companies and robust sectoral allocation, the fund has remained in the top performance quartile over various time periods. Its portfolio includes companies from sectors such as healthcare, banking, and energy, giving it a balanced growth outlook.

Rounding off the list is Bandhan Value Fund, earlier known as IDFC Sterling Value Fund. This fund focuses on emerging businesses across market segments and seeks out companies that are industry leaders or challengers in their space. Although it may underperform during bearish market phases, it has shown solid resilience and outperformance during market recoveries and bull runs. Its ten-year SIP returns have reached over nineteen percent, translating into a value of more than three point three lakh rupees for investors who stuck to their investment plan.

While value funds may not offer instant gratification and may even lag during momentum-driven rallies, they are built for long-term wealth creation. The fund managers invest in stocks that may take time to be recognised by the broader market. This delayed appreciation often results in higher-than-expected returns once the market realigns with the company’s true value. For investors seeking diversification in their portfolio, value funds are an important asset class to consider, especially if the investment horizon is five years or more.

These top-performing funds not only reflect disciplined stock selection but also showcase the power of consistent SIP investing. With long-term focus and smart fund management, value investing continues to deliver for those who are patient.

 

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