Top Value Funds to Invest in the Indian Stock Market in 2024
Value funds invest in stocks considered undervalued based on fundamental characteristics. They follow an open-ended equity scheme and employ a value investment strategy, focusing on shares of companies traded at discounted rates. Investors are drawn to these stocks because they may be undervalued due to temporary factors but hold the potential for high long-term returns.
It’s crucial to distinguish value funds from contra funds. While contra funds target stocks temporarily out of favour, value funds prioritise stocks trading below their intrinsic value. The table below explores some top 10 value funds.
Top 10 Value Funds to Invest in 2024
Here are the top 10 value funds sorted according to 3Y CAGR, sorted from highest to lowest:
| Fund Name | Fund Size (in cr) | 3Y CAGR | Expense Ratio |
|---|---|---|---|
| JM Value Fund | 665.51 | 30.06 | 0.81 |
| Templeton India Value Fund | 1,819.76 | 28.88 | 0.95 |
| HSBC Value Fund | 11,430.68 | 27.78 | 0.79 |
| Nippon India Value Fund | 7,523.32 | 26.98 | 1.15 |
| Bandhan Sterling Value Fund | 8,943.61 | 26.69 | 0.65 |
| Tata Equity P/E Fund | 7,753.52 | 26.08 | 0.82 |
| ICICI Pru Value Discovery Fund | 41,281.57 | 25.67 | 1.00 |
| Aditya Birla SL Pure Value Fund | 5,683.63 | 23.23 | 1.01 |
| Union Value Fund | 226.87 | 22.81 | 1.37 |
| Groww Value Fund | 18.86 | 20.79 | 0.90 |
Disclaimer: Please note that the above list is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing.
Note: The data on the list is from 7th May, 2024. This data is derived from the Tickertape Mutual Funds Screener.
🚀 Pro Tip: You can use Tickertape’s Mutual Fund Screener to research and evaluate funds with over 50+ pre-loaded filters and parameters.
Overview of the Value Funds in India 2024
JM Value Fund
JM Value Fund Direct Plan-Growth, an equity mutual fund by JM Financial Mutual Fund, managed by Asit Bhandarkar, Gurvinder Singh Wasan, and Satish Ramanathan, boasts an impressive AUM of ₹665.51 Crores. As of May 9, 2024, at 10:46 am, its NAV stands at ₹101.810. Over the past year, the scheme has yielded returns of 64.27%, while over three years, it’s at 119.99%, and since its inception, an impressive 595.45%. The minimum SIP investment for this scheme is ₹100. It is one of the top value mutual funds on our list.
Templeton India Value Fund
Franklin Templeton Mutual Fund manages the Templeton India Value Fund, a value oriented fund, which debuted on an unspecified date. The fund, currently overseen by fund managers Ajay Argal and Rajasa Kakulavarapu, holds an asset under management of ₹1,819.76 Crores. As of 09 May 2024 at 10:59 am, its latest net asset value stands at ₹724.897. In the past year, the Templeton India Value Fund Direct Plan-Growth has yielded returns of 44.17%, while over the last three years, it has seen returns of 114.09%. Since its inception, the scheme has delivered a substantial return of 475.65%. Investors can begin with a minimum SIP investment of ₹500.
HSBC Value Fund
The HSBC Value Fund Direct-Growth, an Equity mutual fund from HSBC Mutual Fund, debuted on an undisclosed date and is currently under the management of Gautam Bhupal and Venugopal Manghat. With an AUM of ₹11,430.68 Crores, its latest NAV stands at ₹104.514 as of 09 May 2024 at 11:00 am. Over the last 1 year, the scheme has yielded a return of 51.25%, over 3 years it stands at 108.63%, and since its inception, it has grown by 744.56%. The minimum SIP amount required for investment in this scheme is ₹500.
Nippon India Value Fund
Nippon India Value Fund an equity mutual fund by Nippon India Mutual Fund, is managed by Dhrumil Shah and Meenakshi Dawar. With an AUM of ₹7,523.32 Crores, its latest NAV stands at ₹214.889 as of May 9, 2024, at 11:01 am. Over the past year, the scheme has yielded returns of 54.99%, while over three years, it has seen returns of 104.72%, and since its inception, returns have been at 521.13%. The minimum SIP investment for this scheme is ₹100.
Bandhan Sterling Value Fund
Bandhan Mutual Fund offers the Bandhan Sterling Value Fund, an equity mutual fund managed by Daylynn Gerard Paul Pinto. With an AUM of ₹8,569.07 Crores, its latest NAV stands at ₹151.544 as of May 9, 2024, at 11:02 am. Over the last year, the scheme yielded a return of 42.45%, while over the last three years, it saw a return of 103.36%, and since its launch, a return of 587.89%. Investors can start with a minimum SIP investment of ₹100.
Tata Equity P/E Fund
Tata Equity PE Fund, a scheme by Tata Mutual Fund, managed by Sonam Udasi and Amey Sathe, was launched on an unspecified date. With an AUM of ₹7,300.73 Crores and NAV at ₹353.518 as of May 9, 2024, at 11:02 am. The scheme’s one-year return performance stands at 47.67%, three-year at 100.41%, and since launch at 593.69%. The minimum SIP investment for this scheme is ₹100.
ICICI Pru Value Discovery Fund
ICICI Prudential Value Discovery, an equity mutual fund from ICICI Prudential Mutual Fund, has been managed by Sankaran Naren and Dharmesh Kakkad since its launch. With an AUM of ₹41,281.57 Crores, its latest NAV stands at ₹435.800 (as of May 9, 2024, 11:15 am). Over the past year, the scheme has yielded returns of 41.43%, while over the last three years, it has recorded a growth of 98.45%. Since its inception, its returns have soared by 643.54%. The minimum SIP investment for this scheme is ₹100.
Aditya Birla SL Pure Value Fund
Aditya Birla Sun Life Pure Value Fund is an equity mutual fund from Aditya Birla Sun Life Mutual Fund. It was launched by Kunal Sangoi and currently manages ₹5,683.63 Crores. As of 09 May 2024 at 12:55 pm, its NAV stands at ₹127.658. Over the last year, it has shown a return of 50.33%; over the last 3 years, it stands at 87.14%. Since its launch, it has delivered a return of 591.99%. The minimum SIP investment for this scheme is ₹100.
Union Value Fund
Union Mutual Fund offers the Equity mutual fund, Union Value Fund Direct – Growth. Launched on an undisclosed date, it’s managed by Hardick Bora and Sanjay Bembalkar. With an AUM of ₹226.87 Crores, its latest NAV stands at ₹25.840 as of 09 May 2024 at 12:58 pm. Over the last year, the scheme has yielded returns of 41.87%, while over the last three years, it has returned 84.30%. Since its launch, the return stands at 155.84%. Investors can start with a minimum SIP amount of ₹500.
Groww Value Fund
The Groww Value Fund Direct-Growth, an equity mutual fund scheme by Groww Mutual Fund, is managed by fund managers Anupam Tiwari and Kaustubh Sule. With an AUM of ₹18.86 Crores, its latest NAV stands at ₹28.014 as of 09 May 2024 at 1:00 pm. Over the past year, the scheme has yielded a return of 40.10%, 76.26% over the last three years, and 180.03% since its launch. The minimum SIP investment for this scheme is ₹10.
What is a Value Fund?
Value funds, open-ended equity schemes, focus on investing in undervalued companies with long-term growth potential. Fund managers seek stocks trading at a discount, with intrinsic values exceeding market prices. This strategy, known as value investing, aims for maximum investor profit. Value stocks, typically associated with indexes like NIFTY Value, often offer regular dividends, making them attractive for long-term investors seeking stable returns.
How do Value Funds Work?
Value fund managers seek out undervalued stocks due to various market inefficiencies. While these stocks may currently underperform, managers anticipate future growth potential. As the market recognises the true value of these stocks, their prices typically increase. Value ETFs frequently offer higher dividend yields, as fund managers carefully select stocks with minimal downside risks.
Investment Strategy of Value Funds
Value funds target stocks that the market undervalues. Fund managers conduct in-depth research to find stocks with solid fundamentals like revenue, profitability, and growth potential. They aim to invest in these stocks and profit when the market recognises their worth.
Features of Value Funds
Here are a few key features of value mutual funds:
- Asset Allocation: These mutual funds adhere to SEBI guidelines, allocating a minimum of 65% of investments to equity and equity-linked stocks.
- Risk-Reward Ratio: These value equity funds are prone to market fluctuations due to their primary investment in equity, resulting in volatility and a high-risk rating.
- Investment Caution: Investors should acknowledge the absence of guaranteed returns and be willing to accept the inherent risks associated with value mutual funds.
Factors to Consider While Investing in Value Funds
Before investing in top-value mutual funds, consider these factors:
- Past Performance: Analyze the fund’s performance over 5 to 7 years. This reveals how well the fund manager has pursued the value investing strategy across market cycles.
- Long-term Investment Horizon: Value funds are suitable for investors with a long-term outlook. Sticking to the investment horizon can yield significant returns over time.
- Expense Ratio: Like other mutual funds, value funds have an expense ratio, representing the fee for managing your investment. Be wary of frequent portfolio changes by the fund manager, which can lead to higher transaction costs.
- Market Risk: All mutual fund investments are market-linked and entail risk. Assess how the fund manager adjusts asset allocation to navigate market dynamics effectively.
Who Should Invest in Value Mutual Funds?
Those attuned to macro trends seek higher returns through selective bets. Also, individuals aim for steady, long-term growth and possess patience for value investing. They can expect moderate to high losses even during favourable market conditions.
Why Invest in Value Mutual Funds?
Investing in these funds offers significant benefits. These funds focus on undervalued stocks, avoiding those with inflated expectations, which makes them less vulnerable to market volatility. Additionally, by targeting underappreciated sectors of the economy, value funds help boost the performance and confidence of these often-overlooked stocks, contributing to overall market growth.
How to Choose the Best Value Mutual Funds?
When selecting the best value mutual funds, investors should consider several factors to make informed decisions.
- Fund Performance Analysis: Evaluate the historical performance of the mutual fund compared to its benchmark index and peers. Look for consistent returns over various market cycles.
- Fund Manager Expertise: Assess the track record and experience of the fund manager managing the value mutual fund. A skilled and experienced fund manager can make prudent investment decisions.
- Investment Strategy: Understand the investment strategy of the mutual fund, particularly its approach to identifying undervalued stocks. Look for funds that follow a disciplined and well-defined value investing approach.
- Expense Ratio and Fees: Consider the expense ratio and other fees associated with the mutual fund. Lower expenses can lead to higher net returns for investors over the long term.
- Asset Size and Liquidity: Examine the size and liquidity of the mutual fund’s assets under management (AUM). Larger funds may offer stability and access to more investment opportunities.
- Risk Management: Evaluate the mutual fund’s risk management practices, including diversification and risk-adjusted returns. Assess how the fund manages downside risk during market downturns.
How to Invest in Value Funds?
Investing in value funds offers two avenues: offline and online.
Offline Investment
- Head to the nearest fund house office with essential documents such as a cancelled cheque, address and identity proof, passport-sized photo, PAN card, and KYC documents.
- If a fund house office isn’t accessible, consider approaching a broker. Remember that brokerage charges apply.
Online Investment
- Navigate to mutual fund aggregator websites or explore asset management companies (AMCs) online to locate value funds.
- Compare similar schemes and assess their potential future value.
Success in value fund investment lies in selecting reputable companies, understanding stock intrinsic value, and maintaining diligence to generate profits and build wealth.
How do Value Funds Generate Returns?
Value funds generate returns through a disciplined investment approach focused on selecting undervalued stocks. Fund managers identify companies trading below their intrinsic value, often due to temporary market conditions or investor sentiment. These funds aim to capitalise on the potential for stock prices to rise as the market recognises the true worth of these companies. Additionally, value funds may benefit from dividends paid by the stocks in their portfolio, further enhancing returns over time.
Value Funds in the Current Market
In today’s market, Value Funds are attracting attention for their strong performance in a recovering economy. As the market stabilises and grows, undervalued stocks with solid fundamentals appreciate significantly, benefiting Value Fund investors.
Benefits of Investing in Value Funds
Here are a few benefits of investing in value mutual funds:
- Diversified Portfolio: Value funds offer exposure to various investment options across different market segments, fostering portfolio diversification.
- Long-Term Growth Potential: By targeting undervalued stocks, these funds aim to generate higher returns over the long term, minimising susceptibility to market fluctuations.
- Fundamental Strength: Investments within value funds typically possess strong fundamentals, increasing the likelihood of yielding steady, higher returns.
- Flexibility in Asset Selection: Fund managers can select assets based on market analysis, providing flexibility in portfolio management.
- Suitable for Beginners: Value funds offer accessible investment options with potential for growth, making them ideal for novice investors or those with limited financial knowledge.
- Investment Options: Investors can choose between direct or regular plans, with the added benefit of Systematic Investment Plans (SIP) for consistent monthly investments or lump sum options.
Risks of Investing in Value Funds
When selecting the best value mutual funds for 2024, consider the following risks:
- Stock price discovery may take longer than expected in value investing strategies.
- Low-price stocks chosen by fund managers may take several years to turn around.
- Some stocks may multiply rapidly in the short term, complicating predictions.
- Value stocks may underperform compared to estimations, potentially impacting investment portfolios.
Taxability of Value Funds
Value funds must invest at least 65% of their net assets in equities and equity-linked schemes, subjecting them to taxation under equity-oriented mutual fund laws. Taxes are incurred upon investor exit or redemption and fall under capital gains tax regulations:
- Short Term Capital Tax (STCG) of 15% applies for holdings less than a year.
- Long Term Capital Gains Tax (LTCG) of 10% applies for holdings over 12 months, with an annual exemption of Rs. 1 lakh.
- Dividend income from value fund investments is also taxable, with the fund house deducting a 10% Dividend Distribution Tax (DDT).
To Wrap It Up…
Value funds invest in company shares currently trading below their intrinsic value. They suit aggressive investors with a long-term outlook. Given their potential for delayed returns, ensure alignment with your financial goals when considering a value mutual fund for your portfolio. You can opt for lump sum or SIP investments in these funds. This article aims to inform investors, aiding them in making sound investment decisions.
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Frequently Asked Questions (FAQs) About Value Funds
Value funds are open-ended equity schemes that invest in undervalued companies with long-term growth potential. Fund managers seek stocks trading at a discount, with intrinsic values exceeding market prices. This strategy is known as value investing, and it aims for maximum investor profit.
Value Funds are for long-term investment purposes. Generally, investors invest in these funds for at least 5 years.
In today’s market, value funds can thrive on the rebound in this economy. Undervalued stocks with strong fundamentals soar in value as markets stabilise and expand, rewarding Value Fund investors. However, investors must do their research and consult a financial advisor before investing in any particular fund.
There is usually no lock-in period for value funds, and investors can exit them at any time.
Value funds must invest at least 65% of their net assets in equities and equity-linked schemes, subjecting them to taxation under equity-oriented mutual fund laws. Taxes are incurred upon investor exit or redemption and fall under capital gains tax regulations.
