Nearly a dozen value-oriented equity mutual funds have delivered annualised returns above 20% over the past three years. Two of the better-known names in this group are Axis Value Fund and JM Value Fund. Here’s a short guide to what that performance means and how investors can approach these top-performing value funds.
Why a three-year annualised return matters
Annualised return over three years gives a view of medium-term performance, smoothing out short-term volatility. For value funds, strong three-year returns often reflect successful stock selection, sector positioning and recovery in beaten-down segments of the market.
Named high performers
- Axis Value Fund — Known for concentrated bets on undervalued companies and disciplined stock selection.
- JM Value Fund — Has shown consistent value-oriented exposure and timely rotation into cyclical opportunities.
- Several other value funds also crossed the 20% annualised mark in the same period, reflecting a broader shift toward value stocks.
Why value funds outperformed
- Market rotation: Investors moved from growth to value as economic indicators and interest-rate expectations changed.
- Recovery of cyclical sectors: Industrials, financials and select consumer names bounced back, aiding value portfolios.
- Undervalued stock pick-up: Fund managers who identified high-quality companies at attractive prices benefited disproportionately.
How to choose among top-performing value funds
- Look beyond headline returns: Check rolling returns, consistency across time frames and downside protection during corrections.
- Expense ratio and costs: Lower costs can meaningfully improve net returns over time.
- Fund size and liquidity: AUM and turnover affect flexibility and the ability to deploy capital efficiently.
- Portfolio overlap and concentration: High overlap with other holdings can increase risk; concentrated bets can raise volatility.
- Risk metrics: Review standard deviation, beta and maximum drawdown to match risk appetite.
Practical tips for investors
- Maintain a clear time horizon—value strategies typically need multiple years to play out.
- Consider systematic investing (SIP) to average entry costs and reduce timing risk.
- Avoid chasing funds solely because of past short-term outperformance.
- Review tax implications of equity mutual funds for your holding period and redemption strategy.
- Consult a financial adviser if you’re unsure how a value fund fits your overall portfolio.
Strong three-year annualised returns from value funds highlight attractive opportunities, but they also call for careful selection and a long-term view. Assess the fund’s process, costs and risk profile before investing.