Looking for high-return Value Funds? Explore the best value mutual funds in India for 2026. Understand value investing, top fund options, risks & who should invest.
Introduction
Looking for high returns without taking too much risk? A Value Fund is the smart way to invest. It targets strong companies that are currently undervalued, letting you buy quality stocks at a discount and benefit when the market recognizes their true worth.
In simple terms, it follows the mantra: “buy low, sell high.” While markets can be volatile in the short term, value funds are built for steady, long-term growth, making them perfect for patient investors aiming to build lasting wealth.
In this 2026 guide, we’ll cover everything about value funds—how they work, their benefits and risks, the best options in India, and who should invest.
Also read: “How to Become a Mutual Fund Distributor in India(Step-by-Step Guide).”
What is a Value Fund?
A Value Fund is a mutual fund that focuses on buying quality stocks at discounted prices. It invests in companies whose market price is lower than their intrinsic value, with the goal of long-term wealth creation as the stock prices rise over time.
How a Value fund work?
A Value Fund works on a simple but powerful investing principle:
buy strong companies when they are undervalued and hold them until the market realizes their true worth.
This strategy is based on fundamental analysis, patience, and long-term investing.
1. Identifying Undervalued Stocks
Value fund managers actively search for companies whose current market price is lower than their intrinsic (real) value.
These companies may be undervalued due to:
- Temporary market downturns
- Negative news or short-term business challenges
- Sector-wide slowdown
- Overall market fear or pessimism
2. Fundamental Analysis of Companies
managers study financial details such as:
- Price-to-Earnings (P/E) ratio
- Price-to-Book (P/B) ratio
- Earnings growth
- Cash flow and debt levels
Stocks with lower valuations compared to their peers or past averages are selected for investment.
Before investing, fund managers deeply analyze a company’s fundamentals, such as:
- Revenue and profit growth
- Balance sheet strength
- Cash flow and debt levels
3. Investing with a Margin of Safety
Value funds invest only when there is a margin of safety, meaning:
- The stock price is significantly below its intrinsic value
- Even if estimates are slightly wrong, downside risk remains limited
This helps reduce risk and protect capital over the long term.
4. Long-Term Holding Strategy
Once invested, value funds:
- Hold stocks for the long term
- Do not react to short-term market noise
- Wait patiently for the company’s value to be recognized
Returns may look slow initially, but as the business improves and market sentiment changes, stock prices tend to rise.
5. Value Unlocking and Return Generation
Over time, value is unlocked through:
- Business turnaround
- Improvement in earnings
- Sector recovery
- Better market sentiment
As a result:
- Stock prices move closer to their intrinsic value
- Investors benefit from capital appreciation
- In some cases, dividends add to returns
Simple Example
Suppose a fundamentally strong company has an intrinsic value of ₹1,000 per share but is currently trading at ₹700 due to temporary issues.
- A value fund buys the stock at ₹700
- Business conditions improve over time
- Market price moves closer to ₹1,000
- The fund earns returns from this price correction
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Benifit of Value Funds
Value funds invest in fundamentally strong companies that are available at lower valuations. This strategy helps investors benefit when the market recognizes the true value of these companies over time.
Key Benefits of Value Funds:
- Opportunity to buy quality stocks at discounted prices
- Offers long-term wealth creation
- Provides a margin of safety, lowering downside risk
- Suitable for patient, long-term investors
- Performs well during market recovery phases
Best Value Mutual Funds in India (2026)
Also read: “Best Mutual Fund Portfolio for Long Term 2026 – Grow Wealth Safely.”
Below are some popular and trusted Value Funds in India. These funds follow strong value investing principles.
Quant Value Fund
Quant Value Fund is known for its dynamic investment approach. It uses data-driven models and focuses on undervalued opportunities across sectors.
Why choose Quant Value Fund?
- Active fund management
- Strong risk control
- Suitable for aggressive investors
DSP Value Fund
DSP Value Fund follows a disciplined value investing strategy. It invests in quality companies available at reasonable valuations.
Key highlights:
- Focus on fundamentals
- Long-term consistency
- Suitable for moderate risk investors
Nippon India Value Fund
Nippon India Value Fund invests in companies with strong earnings potential but low market price.
Why investors like it:
- Diversified portfolio
- Experienced fund management
- Suitable for long-term SIP investors
HSBC Value Fund
HSBC Value Fund follows a global value investing philosophy. It focuses on strong balance sheets and stable cash flows.
Benefits:
- Conservative approach
- Good downside protection
- Ideal for risk-averse investors
HDFC Capital Builder Value Fund
HDFC Capital Builder Value Fund is one of the oldest value funds in India. It follows a classic value investing style.
Key reasons to invest:
- Trusted AMC
- Long performance history
- Suitable for retirement planning
Bandhan Sterling Value Fund
Bandhan Sterling Value Fund focuses on high-quality businesses with long-term growth potential.
Why it stands out:
- Strong research process
- Balanced risk approach
- Suitable for long-term wealth creation
“Nifty 50 index funds offer a simple way to invest in India’s top companies. Learn about their benefits in this guide to the top advantages of Nifty 50 index funds in 2025.”
Comparison table of different types of Mutual funds
| Fund Type | Focus | Risk | Returns | Horizon | Best For |
|---|---|---|---|---|---|
| Value Fund | Strong companies below true value | Moderate | Moderate–High | 5+ years | Patient investors seeking steady growth |
| Growth Fund | High-growth potential companies | High | High | 5+ years | Risk-takers aiming for big gains |
| Flexi Cap Fund | Mix of large, mid & small-cap stocks | Moderate–High | Moderate–High | 5+ years | Investors wanting diversified exposure |
| Large Cap Fund | Top 100 companies by market cap | Low–Moderate | Moderate | Medium–Long | Conservative investors focusing on safety |
| Mid Cap Fund | Companies ranked 101–250 | High | High | 5–7 years | Growth seekers with moderate risk |
| Small Cap Fund | Smaller companies with high potential | Very High | Very High | 5–7+ years | Aggressive investors aiming for max returns |
“For investors looking for top-performing value funds, these value schemes with over 20% annualised returns are worth checking out for detailed performance insights.”
Taxibility of Value Funds(India):
Value Funds are taxed like equity mutual funds in India.
Tax Rules:
- Short-Term Capital Gains (STCG):
If units are sold within 12 months, gains are taxed at 15%. - Long-Term Capital Gains (LTCG):
If units are sold after 12 months, gains above ₹1 lakh in a financial year are taxed at 10% (without indexation).
Dividends from Value Funds:
- Dividends are added to your income and taxed as per your income tax slab.
Who should invest in Value Funds
Value Funds are suitable for investors who:
- Have a long-term investment horizon (5 years or more)
- Can handle short-term market volatility
- Believe in fundamental-based investing
- Prefer steady wealth creation over quick returns
- Want to invest in undervalued, quality companies
- Are willing to stay patient during market downturns
How to Invest in Value Funds
“If you want expert-backed insights, you can also explore this list of Best Value Mutual Funds by Bajaj Finserv to understand top-performing value-oriented schemes in India.”
nvesting in value funds requires a long-term approach and patience, as these funds perform best when held through market cycles.
Key Points to Invest in Value Funds:
- Define your financial goals and keep a 5+ year time horizon
- Select a good value fund with a consistent track record
- Complete your KYC process
- Choose SIP or lump sum investment based on your comfort
- Stay invested and avoid frequent switching
- Review performance periodically, not daily
Why should you invest in value funds
Value funds are a good investment choice because they focus on buying fundamentally strong companies at attractive prices, which helps investors benefit when the market recognizes their true value.
Key Reasons to Invest in Value Funds:
- Opportunity to invest in quality stocks at lower valuations
- Potential for long-term wealth creation
- Provides a margin of safety, reducing downside risk
- Suitable for long-term, patient investors
- Performs well during market recovery phases
- Helps in portfolio diversification
Conclusion
Value funds are ideal for investors who want high long-term returns by investing in undervalued but strong companies. With patience and a long-term horizon, the best value mutual funds in India can deliver stable and rewarding growth, especially during market recoveries. If you believe in fundamentals over short-term trends, value funds can be a smart addition to your 2026 investment portfolio.
“Confused between investing via SIP or lump sum in 2026? Read this detailed guide on SIP vs Lumpsum investment to understand the differences in returns, risk, and tax implications.”
FAQs (Frequently Asked Questions)
Q1. What is a Value Fund?
A Value Fund is an equity mutual fund that invests in undervalued stocks with strong fundamentals.
Q2. Is Value Fund good for beginners?
Yes, beginners with long-term goals can invest through SIP.
Q3. Which is the best Value Fund in India?
Top options include Quant Value Fund, DSP Value Fund, Nippon India Value Fund, and HDFC Capital Builder Value Fund.
Q4. How long should I stay invested in a Value Fund?
Minimum 5 years is recommended.
Q5. Are Value Funds risky?
They carry moderate risk but are safer than aggressive growt