5 Top Performing Value Mutual Fund SIPs

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I am Divya Grover here to help you take informed mutual fund investment decisions.

If you are looking to benefit from the growth potential of the undiscovered gems of the stock market then value mutual funds can offer a worthy opportunity.

Value mutual funds identify fundamentally sound stocks that are trading below their intrinsic/fair value and hold them until their value/potential is realised.

SEBI defines value funds as equity-oriented mutual funds that follow the value-investment strategy, investing a minimum of 65% of its assets in equity and equity-related instruments.

As these funds invest in undervalued stocks, they can potentially offer better margin of safety compared to growth-oriented funds.

In this video, we will explore the 5 highest return value mutual funds in the last 10 years, based on SIP returns.

#1 JM Value Fund

Originally launched as a Sectoral Fund in June 1997, this fund was recategorised and renamed to JM Value Fund in 2018.

While the past performance is not comparable due to the change in investment mandate, JM Value Fund has turned out to be a category outperformer by delivering robust gains in recent years.

The fund's top stocks are Godfrey Philips India (3.9%), HDFC Bank (3.2%), and L&T (3.2%).

Its top sectors are finance (12.7%), capital goods (11.6%), and banks (10.8%).

The fund's high portfolio churn strategy and substantial exposure to lower market cap stocks has enabled it to generate high alpha over the years.

#2 HSBC Value Fund

Launched in January 2010, HSBC Value Fund was previously known as L&T Value Fund but was renamed when HSBC acquired the mutual fund arm of L&T.

The fund follows a blend of value and growth style of investing in which the fund managers aim to invest in high growth-oriented stocks but are vary of the price they are willing to pay.

In the last 10 years, HSBC Value Fund delivered an XIRR of 20.1%.

A monthly SIP of Rs 10,000 in the fund over a 10-year period, would now be valued at Rs 3.46 m.

The fund's top stocks are HDFC Bank (4.3%), Multi Commodity Exchange of India (3.8%), and ICICI Bank (3.7%).

Its top sectors are banks (21.7%), finance (12.1%), and infotech (7.4%).

Under the guidance of seasoned fund manager, Venugopal Manghat, who has been managing the scheme for over a decade, the fund has managed to reward its long-term investors.

#3 Nippon India Value Fund

Launched in June 2005, Nippon India Value Fund aims to identify undervalued stocks across market caps having high potential by using fundamental analysis.

It endeavours to avoid value traps where the long-term growth is uncertain or can be disrupted.

In the last 10 years, Nippon India Value Fund grew at an XIRR of 19.7%.

A monthly SIP of Rs 10,000 in the fund over a 10-year period, would now be valued at Rs 3.39 m.

The fund's top stocks are HDFC Bank (9%), ICICI Bank (5.3%), and Infosys (3.9%).

Its top sectors are banks (23.3%), finance (10.1%), and infotech (9.4%).

The fund maintains a well-balanced exposure across market caps which has helped it benefit from the rally in the market over the past few years.

#4 ICICI Pru Value Fund

Launched in August 2004, ICICI Pru Value Fund (previously ICICI Pru Value Discovery Fund) is the largest scheme in the Value Fund category.

The fund has consistently ranked among the top quartile performers in the Value Fund category across time frames and has rewarded investors with superior risk-adjusted returns.

In the last 10 years, ICICI Pru Value Fund grew at an XIRR of 19.6%.

A monthly SIP of Rs 10,000 in the fund over a 10-year period, would now be valued at Rs 3.37 m.

The fund's top stocks are Reliance Industries (7.3%), ICICI Bank (6.8%), and HDFC Bank (6.7%).

Its top sectors are banks (22.5%), healthcare (11.4%), and crude oil (10.1%).

ICICI Pru Value Discovery Fund benefits from high-conviction large-cap bets as well as the expertise of its veteran fund manager, Sankaran Naren.

#5 Bandhan Value Fund

Launched in March 2008, Bandhan Sterling Value Fund (erstwhile IDFC Sterling Value Fund) focuses on seeking value opportunities by investing predominantly in emerging businesses.

The fund seeks opportunities across market caps, focusing on companies that are leaders/challengers in their respective fields

In the last 10 years, Bandhan Value Fund grew at an XIRR of 19.2%.

A monthly SIP of Rs 10,000 in the fund over a 10-year period, would now be valued at Rs 3.3 m.

The fund's top stocks are HDFC Bank (8%), Reliance Industries (7.3%), and Axis Bank (4.7%).

Its top sectors are banks (22.2%), crude oil (9.7%), and infotech (7.3%).

Although the fund has traits of underperformance during bearish market phases, it has proved its potential during the recovery and bull market phases, highlighting its potential to perform well over the long run.

Conclusion

This brings us to the end of the 5 highest return value funds in the last 10 years.

Since value funds invest in undervalued/out of favour stocks, the fund managers' investments may take time to pay off.

Therefore, value funds may underperform in the short to medium term, particularly when market rallies are momentum-driven.

However, over the long term, value funds can generate returns in line with growth-oriented funds or even outperform them.

Value funds can form a part of the 'core' portfolio of investors who are aiming for diversification across investment styles, if the investment horizon is at least 5-7 years.

Please note that this video is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund.

Returns mentioned herein are in no way a guarantee or promise of future returns.

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Signing off for now.

Happy Investing.

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