Broad-based earnings recovery could provide performance boost

Value funds held their ground among diversified equity funds in 2025 despite a range-bound market.

- SARBAJEET K SEN

They have delivered an average return of 8.6 per cent over the past year, second only to large-cap funds’ 9.7 per cent.

Value funds invest in stocks that are attractively priced and aim to benefit as prices catch up with intrinsic value. “The idea in value investing is that the market will eventually recognise the true worth of these stocks, leading to price increase,” says Parul Maheshwari, certified financial planner. According to data from the Association of Mutual Funds in India (Amfi), 25 value funds managed assets worth ₹2.17 trillion, as on November 30, 2025.

The road ahead

A broad-based recovery in earnings in 2026 could provide a supportive environment. Value funds currently accumulating stocks at reasonable valuations may benefit.

“Even when broader indices are trading at elevated valuations, individual names may be going through a period of underperformance, thereby creating opportunities to buy good businesses at reasonable prices,” says Dharmesh Kakkad, senior fund manager, ICICI Prudential Asset Management Company (AMC).