Mutual Funds · Value

Value Funds

Equity funds that explicitly follow a value-investing style: buy stocks trading below intrinsic value (low P/E, low P/B, high dividend yield). SEBI defines value-strategy funds since 2018 — at least 65% in equities with a stated value approach. Typical 3-yr returns: 18-26% CAGR; expense ratio 1.0-1.8% direct. Counter-cyclical: outperforms in markets where growth is expensive.

Who needs this

Investors who believe markets misprice quality cheap stocks. Comfortable with 2-3 year underperformance during growth-led rallies (2017-2020 was painful for value). 7+ year horizons.

Category at a glance

Equity min

65%

SEBI mandate

Investment style

Value

Stated upfront, must follow

Typical 3-yr CAGR

18-26%

FY24-25 was strong

Expense ratio (direct)

1.0-1.8%

Higher than index, lower than thematic

Volatility

Medium-high

Lower than mid/small but higher than large-cap

Top 5 value funds

Source: AMFI + AMC factsheets · refreshed quarterly

Fund	AMC	Expense %	3y CAGR
ICICI Pru Value Discovery	ICICI Pru MF	1.05%	24.2%
HDFC Value Fund	HDFC MF	1.10%	23.5%
Tata Equity P/E Fund	Tata MF	1.18%	22.8%
Aditya Birla Sun Life Pure Value	Aditya Birla MF	1.05%	21.4%
Nippon India Value Fund	Nippon India MF	1.10%	20.9%

Key decisions

Q1
Is value investing dead?
Value underperformed growth for 2017-2020 globally (the FAANG era). FY24-25 saw value funds in India outperform Nifty 50 by 8-12% as the rally broadened beyond a few large-caps. Style cycles are real — value tends to win when the market reverts to fundamentals.
Q2
Value fund vs Nifty Index — which is better?
Over 10-yr rolling windows, top-quartile value funds in India have beaten Nifty 50 by 2-4% CAGR after fees. But the median value fund has matched or slightly trailed the index. Picking the right manager matters more in value than in any other category.
Q3
How long should I hold a value fund?
Minimum 7 years. Value strategies experience long stretches (2-4 years) of underperformance. Holding through those is the cost of the eventual outperformance. If you can't stomach 2 years of red, stick to large-cap or index.

SEBI rules + scheme specifics

SEBI Oct 2017 categorisation: minimum 65% in equities following a stated value strategy.
Marked 'very high' risk on the SEBI riskometer.
Style cycles can be long; do not switch funds based on 1-2 year underperformance.
LTCG: 12.5% on gains > ₹1.25L/year (held ≥ 12 months).