Value mutual funds have seen a significant surge in investor interest, attracting Rs 22,757 crore in inflows in 2024, nearly double the amount from the previous year, driven by strong returns in the segment.
This influx of capital reflects a shift in investor focus towards fundamentally strong yet undervalued stocks.
Industry data showed that, on average, value mutual funds provided returns exceeding 21% in 2024, and delivered nearly 20% returns over the last three years.
Looking ahead to 2025, experts expect value mutual funds to maintain their appeal, particularly in light of global uncertainties.
Trivesh D, COO of Tradejini, highlighted that factors such as a potential RBI rate cut and geopolitical shifts, including changes in US policies, could impact investor sentiment.
According to the Association of Mutual Funds in India (AMFI), value mutual funds saw inflows of Rs 22,757 crore in 2024, a significant rise from Rs 11,927 crore in 2023.
This surge in investment contributed to a 39% rise in assets under management (AUM), which reached Rs 1.88 trillion by December 2024, up from Rs 1.33 trillion in 2023.
Notable funds such as UTI Value Fund, Axis Value Fund, Quantum Long Term Equity Value Fund, and ICICI Prudential Value Discovery Fund have seen impressive returns.
Upcoming Mahindra Manulife Value Fund
Furthermore, Mahindra Manulife Value Fund is gearing up for the launch of its new fund offering (NFO) on February 7, which is likely to draw considerable investor attention.
The fund aims to capitalize on three key strategies: investing in high-quality companies, businesses undergoing a recovery phase, and sectors with strong long-term growth potential.
Santosh Joseph, Co-founder and CEO of Germinate Investor Services explained that the surge in inflows was largely due to strong past performance and a resurgence in key sectors.
Following a lackluster performance in 2022, value funds saw a remarkable recovery in 2023 and sustained strong returns into 2024.
The market’s climb to new highs attracted investors looking for undervalued sectors showing promising growth.
Sectors like metals, real estate, construction, capital goods, PSUs, and manufacturing, which drove the rally in 2023 and 2024, are likely to maintain their strength due to ongoing government infrastructure investments and industrial growth.
Demographic Shift Toward Value Funds
Feroze Azeez, Deputy CEO of Anand Rathi Wealth Ltd, noted, “Value investing has been in the spotlight over the past few years, and for good reason. Investors have realised that buying fundamentally strong stocks at lower valuations can be a smart way to build wealth over time.”
This trend is reflected in the Nifty 500 Value 50 Index, which recorded returns of 20% in 2024 and 62% in 2023.
The mutual fund industry is also witnessing a shift in investor demographics.
As of December 2024, the number of folios increased by 23.56 lakh to 80 lakh, showing that long-term investors are gravitating toward value funds amid an uncertain macroeconomic environment.
Younger investors, particularly Gen Z, tend to prefer momentum stocks for quick gains, while older investors (40+) are focusing on value investments.
Experts suggest that balancing portfolios across large-cap, mid-cap, and flexi-cap funds may help investors navigate the changing market landscape.
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