If you’re looking for mutual funds that combine the potential for long-term wealth creation with a disciplined investment approach by picking up undervalued stocks, value-oriented mutual funds may deserve a closer look. These funds follow a value investing strategy, investing in stocks that are trading below their intrinsic value across different sectors.
Several value-oriented mutual funds have delivered more than 22% returns over the past year, outperforming many traditional equity categories. But does a strong one-year performance mean you should add a value fund to your portfolio?
The key question for you is not whether these funds generated over 22% returns in the past year, but whether their investment strategy aligns with your risk appetite, investment horizon, and portfolio allocation strategy.
Top performing value-oriented funds in the last 1 year
According to Value Research data, five value-oriented funds generated more than 22% returns in the last 1-year, compared to the value fund category average return of 7.19% and the benchmark return of just 2.35%.
A notable aspect of the performance is the wide gap between fund returns and the benchmark return of 2.35%. All five funds outperformed the benchmark by nearly 20 percentage points, highlighting the effectiveness of the value investing strategy during the period.
Among the funds listed, Axis Nifty500 Value 50 Index Fund had the lowest expense ratio at 0.11%, while UTI Nifty 500 Value 50 Index Fund charged 0.50%, the highest among the five. The data indicates that investors were able to achieve strong returns even through low-cost passive value strategies.
| Funds | 1-year return | BSE 500 TRI – Benchmark return | Category average return | Expense ratio |
| Quant Value Fund Direct Growth | 24.46% | 2.35% | 7.19% | 0.44% |
| ICICI Prudential Nifty200 Value 30 Index Fund – Direct Plan | 24.31% | 2.35% | 7.19% | 0.32% |
| Axis Nifty500 Value 50 Index Fund – Direct Plan | 22.52% | 2.35% | 7.19% | 0.11% |
| Bandhan Nifty 500 Value 50 Index Fund – Direct Plan | 22.07% | 2.35% | 7.19% | 0.31% |
| UTI Nifty 500 Value 50 Index Fund – Direct Plan | 22.04% | 2.35% | 7.19% | 0.50% |
| Source: Value Research |
Quant Value Fund – Direct Plan
Value Research has given the Quant Value Fund-Direct Plan a 3-star rating. It was introduced on November 30, 2021.
The fund delivered a 3-year average return of 26.29%, significantly higher than both its benchmark BSE 500 TRI (13.86%) and the value fund category average (17.99%).
The fund has produced a 22.05% return since its inception. Sandeep Tandon, Ankit A. Pande, Sanjeev Sharma, Ayusha Kumbhat, Varun Pattani, Sameer Kate, and Yug Tibrewal are now in charge of managing this mutual fund.
The fund’s asset allocation comprises 98.2% in equity, 6.29% in debt, and -4.5% in Cash and Cash Equivalents (CCE).
Top 10 holdings: Adani Enterprises, Adani Green Energy, Piramal Finance, Adani Power, HFCL, Aurobindo Pharma, LIC Housing Fin., HDFC Life, Tata Power, and Manappuram Finance.
Top 5 sector allocation: Energy & Utilities, Financial, Materials, Industrials, and Technology.
Risk profile: At 21.64%, the fund’s volatility is substantially higher than the benchmark’s 15.41% and the category average of 16.20%; however, the fund’s Sharpe ratio of 0.94 is notably higher than the benchmark’s 0.52 and the category average of 0.74, indicating that the fund has delivered superior risk-adjusted returns despite its higher volatility.
With a Sortino ratio of 1.85, the fund significantly outperforms the benchmark (0.68) and the category average (1.03), suggesting efficient management of downside risk relative to the returns generated.
ICICI Prudential Nifty200 Value 30 Index Fund – Direct Plan
This value-oriented fund launched on October 18, 2024, and since its inception, the fund has generated 8.31% CAGR.
The fund is currently managed by Nishit Patel, Ashwini Jemin Bharucha and Venus Ahuja.
The fund’s asset allocation comprises 99.64% in equity and 0.36% in CCEs.
Top 10 holdings: Hindalco Ind, NTPC, Tata Steel, Power Finance, Coal India, ONGC, Tata Motors Passenger Vehicles, Power Grid, SBI and Grasim.
Top 5 sectoral holdings: Financial, Energy & Utilities, Materials, Consumer Discretionary and Industrials.
Risk profile: The fund has been classified as very high risk by Value Research, which is expected given its exposure to value-oriented equities.
Axis Nifty500 Value 50 Index Fund – Direct Plan
Since its inception on October 24, 2024, this value-oriented mutual fund has produced a return of 10.52%.
The scheme’s fund managers are Nandik Mallik and Rohit Gautam.
The fund’s asset allocation comprises 99.76% in equity, 0.52% in debt, and -0.29% in CCEs.
Top 10 holdings: Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI, and Bharat Petroleum.
Top 5 sectoral exposure: Materials, Energy & Utilities, Financial, Consumer Discretionary, and Industrials.
Risk profile: The fund has been classified as very high risk by Value Research, since the scheme is relatively new, risk-adjusted performance metrics for the fund itself are not yet available.
Bandhan Nifty 500 Value 50 Index Fund – Direct Plan
This mutual fund was introduced on October 29, 2024, and it has produced 9.93% since then. The asset allocation of the fund consists of 0.07% CCEs and 99.93% equities.
Abhishek Jain and Mayuresh Nagvekar currently manage the fund.
Top 10 holdings: Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI, and Bharat Petroleum.
Top 5 sector-wise holdings: Materials, Energy & Utilities, Financial, Consumer Discretionary and Industrials.
Risk profile: The risk metrics indicate that the fund belongs to a high-risk, high-return category.
UTI Nifty 500 Value 50 Index Fund – Direct Plan
This is the only value-oriented mutual fund on our list, which has been rated 5-star by Value Research.
The fund has delivered an impressive mean return of 30.10% in the last 3 years, significantly outperforming both the BSE 500 TRI (13.86%) and the value-oriented fund category average (17.99%).
Since its launch on May 10, 2023, the fund has produced a remarkable return of 30.59%.
The fund managers of UTI Nifty 500 Value 50 Index Fund – Direct Plan are Sharwan Kumar Goyal, Ayush Jain and Lokesh Kulthia.
The fund’s asset allocation comprises 99.77% in equity and 0.23% in CCEs.
Top 10 holdings: Hindalco Ind, Tata Steel, NTPC, Coal India, ONGC, Grasim, Tata Motors Passenger Vehicles, Power Grid, SBI and Bharat Petroleum.
Top 5 sector-wise holdings: Materials, Energy & Utilities, Financial, Consumer Discretionary, Industrials.
Risk profile: The fund is classified as Very High Risk, reflecting its exposure to value-oriented equities that can experience significant market fluctuations. The fund’s standard deviation of 20.73% is higher than the benchmark’s 15.41% and the category average of 16.20%. This suggests that the fund experiences greater price fluctuations and volatility because of its concentrated exposure to undervalued stocks.
The fund’s Sharpe Ratio of 1.17 is considerably higher than the benchmark’s 0.52 and the category average of 0.74, reflecting strong risk-adjusted performance.
The fund’s Sortino Ratio of 1.91 is well above the benchmark’s 0.68 and the category average of 1.03.
The fund has a Beta of 1.17, compared to the category average of 0.99, which indicates that the fund is more volatile than the broader market.
The fund’s Alpha of 14.91% is substantially higher than the category average of 4.17%. A strong positive alpha indicates that the fund has generated significant excess returns after adjusting for the risk taken.
Who should invest in value-oriented mutual funds, and what should be the investment horizon?
AMCs primarily follow 2 styles for their mutual fund investing- value-oriented style and growth-oriented style. Each fund manager has their own style which they adopt for their fund.
In value investing, fund managers look for companies that are undervalued and trading below what they believe is their intrinsic worth. These are often businesses with strong fundamentals and healthy balance sheets that may be temporarily out of favour with the market. The idea is to invest in them at attractive valuations and benefit when the market eventually recognizes their true value over time.
“This style is best suited for investors with a long investment horizon because value investing requires patience. Markets need time to reprice and re-rate a stock which is undervalued. Hence, they are most suitable for investors who can stay invested through market cycles, continue SIPs during weaker phases and avoid judging performance based on one-year returns,” said Jasmeet Singh, Executive Director, Anand Rathi Wealth Ltd.
“We have seen periods when value investing outperforms and others when growth leads the market. Having balanced exposure to both styles helps investors participate across different market cycles and reduces dependence on any single investment approach,” Jasmeet Singh further added.
Can value funds help investors navigate market volatility better than growth-oriented funds?
Value funds can help investors navigate volatility over the long term because different investment styles work at different points in the market cycle. There are times when growth stocks lead returns, and there are times when value stocks come back into favour.
Trying to predict these shifts consistently is extremely difficult for investors.
“They should not view value and growth as an either-or decision and have exposure to both styles. This allows a portfolio to participate across different market environments rather than depending on a single trend. At the same time, investors should not assume that value funds are safer or that they fall less during market corrections,” commented Jasmeet Singh.
The benefit of value investing is not protection from market falls, but it provides diversification and helps deliver a more balanced long-term outcome.
What are the biggest risks investors should be aware of before investing in value-oriented funds?
The biggest risk is not value investing itself, but becoming overly dependent on it. Like every investment style, value goes through periods when it performs well and periods when it lags the broader market. Investors who allocate their entire portfolio to value-oriented funds may find their portfolio in the red during phases when growth or momentum-driven stocks are leading returns.
This is why diversification across investment styles is important. For CY26, return of the Value Index stands at around 6%, compared to 3% for the Momentum Index. However, there have been periods when momentum has comfortably outperformed value. Different styles lead at different points in time, which is why investors should have exposure to both rather than relying entirely on one approach.
Disclaimer: This article is for informational purposes only and should not be construed as investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing.
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