Value Mutual Funds Attract Rs. 22,757 Crore in 2024 Due to Great Returns
Value mutual funds saw a big increase in interest in 2024, with investors putting in Rs. 22,757 crore, nearly twice the Rs. 11,927 crore they invested in 2023. This increase was largely led by the fantastic returns that value funds have given investors, with more and more investors looking to invest in fundamentally strong yet undervalued stocks.
Industry data, for instance, showed value mutual funds experienced an average return of more than 21% in 2024 and almost 20% over the last three years. Since the global economy remains uncertain, one thing is sure that trend will still be a top concern among investors in 2025.
Experts point out that, among other things, a likely RBI rate cut and geopolitical issues, including policy changes in the United States, could impact investor sentiment in the near term.
Value funds saw a 39% increase in their total assets in 2024. By December 2024, their assets under management (AUM) reached Rs. 1.88 trillion, up from Rs. 1.33 trillion in 2023, according to the Association of Mutual Funds in India.
These include UTI Value Fund, Axis Value Fund, Quantum Long Term Equity Value Fund, and ICICI Prudential Value Discovery Fund. Some of these funds performed well in the last one year and attracted more investors. The Mahindra Manulife Value Fund NFO that opened recently on February 7 is expected to gain more interest. The three main areas it focuses on investing in are: strong companies, companies that are coming out of a weak position, and those particular industries or companies where there is long-term growth; these help to create a balanced portfolio with different types of companies and industries.
The significant increase in investment is primarily because value mutual funds have been performing really well. These funds experienced a rebound, having underperformed in the year 2022. In the year 2023, they did very well. In the year 2024, it performed even better as markets were increasing and investor’s confidence had more boosts.
The significant industries in which this was so greatly reflected are as follows:
- Metals
- Real Estate
- Construction
- Capital Goods
- Government Companies
- Manufacturing Industries.
These should stay strong and only get support from government spending in infrastructure as well as from an industrial growth pattern.
Value Investing Gains Acceptance
More people are now interested in value investing. This means they are learning that they can build long-term wealth by buying strong companies’ stocks when they are priced low. The numbers support this trend. The Nifty 500 Value 50 Index gave a 20% return in 2024, 62% in 2023, 23% in 2022, and 54% in 2021.
Value stocks that are undervalued at the time of buying but carry good fundamental attributes and growth prospects are gaining popularity and are increasingly considered an alternative to growth stocks, which mainly focus on companies that might be huge expansion possibilities in the future.
The mutual fund industry is also witnessing a change in the demographic profile of investors. Folios increased by 23.56 lakh in 2024 to 80 lakh by December. This reflects a shift toward long-term stability amid uncertainty over macroeconomic environments.
While younger investors, especially Gen Z, prefer momentum stocks as a means to gain money rapidly, older investors aged 40 and above prefer value investments with long-term stability and growth.
The large-cap, mid-cap, and flexi-cap funds should ideally be invested across each category of funds in an investor’s portfolio, suggests the financial expert. As value mutual funds have picked up the pace, generating solid returns for investors, these funds will be among the investment preferences going ahead, too.
