Amid market turbulence, see the best performing value funds: Value Research study.
Kolkata: Value investing consists of spotting the performers of tomorrow — companies or stocks with robust fundamentals and healthy balance sheets that are not finding favour with the market for whatever reason. The point is to invest in them and reap the benefits when the market discovers their intrinsic value. Therefore, anyone seeking MF schemes that combine the potential for long-term wealth creation through currently undervalued stocks can find value-oriented mutual funds to be a great instrument. Even in this turbulent market, a few value funds have generated returns in excess of 22% returns over the past year. Let’s have a look at these funds. It is a completely different matter whether you invest in them, since you can be guided only by a qualified personal finance adviser.
The top-performing mutual fund
Value Research data indicate that five value funds generated more than 22% returns over the past year. This rate stands out against the category average of 7.19% and the benchmark return of 2.35%. These funds are:
Quant Value Fund Direct Growth: 24.46% (one-year return)
ICICI Prudential Nifty200 Value 30 Index Fund – Direct Plan: 24.31%
Axis Nifty500 Value 50 Index Fund – Direct Plan: 22.52%
Bandhan Nifty 500 Value 50 Index Fund – Direct Plan: 22.07%
UTI Nifty 500 Value 50 Index Fund – Direct Plan: 22.04%
UTI Nifty 500 Value 50 Index Fund
This fund has been rated 5-star by Value Research. Over the past three years, it has generated a 30.10% return. In the process, it outperformed the BSE 500 TRI, which generated 13.86% return, and the value-oriented fund category average, which was 17.99%. Since this fund was introduced on May 10, 2023, it has generated a return of 30.59%. Its assets are 99.77% in equity and 0.23% in cash and cash equivalents.
Its top 10 stocks are Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI and Bharat Petroleum. The fund is categorised as very high risk, which is inherent in value investing. Its metrics indicate greater price fluctuations and volatility, as it focuses its investment on undervalued stocks. Its Sharpe Ratio of 1.17 is far higher than the benchmark's 0.52 and the category average of 0.74. This reflects a robust risk-adjusted performance. With a high Beta (1.17), the fund also displays more volatility than the broader market. But its Alpha of 14.91% against a category average of 4.17% indicates it has generated excess returns after adjusting for the risk that the fund manager took.
Quant Value Fund details
The fund began its journey on November 30, 2021. Its average return over three years was 26.29%, which is far higher than the 13.86% offered by the benchmark BSE 500 TRI and the value fund category average (17.99%). Calculated since inception, the returns have been 22.05%. Its assets are 98.2% in equity.
The top 10 holdings of this fund are Adani Enterprises, Adani Green Energy, Piramal Finance, Adani Power, HFCL, Aurobindo Pharma, LIC Housing Finance, HDFC Life, Tata Power, and Manappuram Finance.
Risk profile: It stands at 21.64%, higher than the benchmark’s 15.41% and the category average of 16.20%. But its Sharpe ratio of 0.94 is also higher than the benchmark’s 0.52 and the category average of 0.74. This indicates that it has registered superior risk-adjusted returns, overcoming higher volatility. There is also efficient downside risk management.
ICICI Prudential Nifty200 Value 30 Index Fund
It began its journey on October 18, 2024. Its assets are almost entirely in equity (99.64%), with only 0.36% in cash and cash equivalents. The top 10 holdings of this fund are Hindalco Ind, NTPC, Tata Steel, Power Finance, Coal India, ONGC, Tata Motors Passenger Vehicles, Power Grid, SBI and Grasim. Risk profile: It carries a very high risk, as is expected in value investing.
Axis Nifty500 Value 50 Index Fund
This is also a new fund, and it began its journey on October 24, 2024. This value-oriented mutual fund has produced a return of 10.52%. About 99.76% of this fund's assets are in equity. Its top 10 holdings are Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI, and Bharat Petroleum. This fund also carries a very high risk. Risk-adjusted performance metrics for this fund are not yet available since it is so new.
Bandhan Nifty 500 Value 50 Index Fund
This mutual fund is new too and began its journey on October 29, 2024. The returns since inception have been 9.93%. As much as 99.93% of the assets are equities, while the rest are cash and cash equivalents. The top 10 holdings of this fund are Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI and Bharat Petroleum. This too is a high-risk fund.
Who can invest in value funds?
Value investing is suitable for those with a long investment horizon. They key word here is patience. Markets need time to discover the proper value of a fundamentally strong but undervalued stock. Therefore, investors should have the patience to continue SIPs during downturns and must not take short-term windows to measure performance.
