Value funds are desirable as they have the potential to provide consistent long-term growth by buying essentially “underweighted” fundamentally sound stocks. Backed by an excellent track record and a history of delivering alpha by employing rigorously defined strategies, value funds are a proposition to consider in January 2025. This blog discusses three valuable options to consider so your investment does not go in vain.
Here’s a look at three promising options for value funds to invest next month but before that, let’s take a quick overview of its definition.
What Are Value Funds?
Value funds as per SEBI are portfolio-based equity-oriented mutual funds with at least 65% of the portfolio investment in equity and its associated instruments. These funds follow a value investing strategy, identifying stocks that are trading below their intrinsic value due to market misperceptions or temporary hurdles. With the recovery of these stocks over time, they present massive growth possibilities.
In 2024, value funds achieved good average returns with top-performing funds yielding up to 29% returns. These funds frequently cover downside risk in periods of market stress and therefore are a cornerstone for investors with a long-term view.
Value Funds to Invest
1. JM Value Fund
Since 1997, JM Value Fund has maintained a performance superior to its benchmark, the BSE 500 TRI index. In the last three years, the fund has posted a CAGR of 28.9%. Its holdings are spread across a broadly diverse portfolio spanning large companies (such as Infosys, HDFC Bank, and ICICI Bank), and mid-cap and small-cap investments. Due to JM Value Fund’s ability via dynamic strategies and high-quality stock preference to achieve long-term growth, it is a good tool.
2. HSBC Value Fund
In the past, now called L&T Value Fund, HSBC Value Fund has a history of producing strong returns with professional fund management. The fund is balanced between value and growth stocks in size categories with a 26.7% compounded annual growth rate (CAGR) in the past three years. Key stakes are ICICI Bank, HDFC Bank, and Tech Mahindra, with sectors spread over across the banking, infrastructure, and infotech industries.
3. Templeton India Value Fund
A strong recovery has been witnessed in one of the oldest of its type, Templeton India Value Fund, in recent years. With a three-year CAGR of 26.2% its portfolio is composed of blue-chip stocks like Reliance Industries and ITC. The fund’s sectoral, and thus diversified, design makes it well poised for withstanding and growth through macroeconomic full market cycles.
Value funds present a potentially attractive risk-adjusted option for long-term equity investors. Although such funds may lack the gain during a few brief market upturns, their commitment to undervalued stocks guarantees steadiness during downturns and strong returns during upturns.
To get the best performance, think of the “Systematic Investment Plan (SIP)” way to deal with market swings whilst getting the rewards of steady investing. It is imperative that your investments are kept on track with your needs financially and your tolerance of risk to achieve the best possible returns.
Also, Read: Tips for Investing in Mutual Funds for Beginners