Five of the larger value funds returned between 12.4% and 13.3% a year over the five years to 28 September 2026, all ahead of the Nifty 500 TRI's 9.14%. Over the last year they split sharply, from −5.79% to 5.88%, so compare them over long periods, on cost and on manager continuity.
A value fund buys shares that its manager thinks are priced below what the business is worth, and waits for the market to agree. It is an equity fund and carries full stock-market risk. This guide explains the category, what SEBI's February 2026 rules changed, how to judge a value fund, and how five of the larger funds compare on data to 28 September 2026. It compares funds; it does not recommend any of them.
What a Value Fund Does
Value managers look for companies whose share price is low relative to measures such as earnings, book value, cash flow or dividends. Often these are businesses that are out of favour, in a weak part of their cycle, or simply overlooked. The bet is that over several years the price moves closer to the value of the business.
The risk is that a cheap stock stays cheap, or gets cheaper, because the market was right about its problems. Value managers call this a "value trap". How well a manager avoids traps is most of what separates one value fund from another.
Value is a style, not a sector. A value fund can own banks, software companies or carmakers, as long as the manager thinks they are cheap. It overlaps with, but is not the same as, a dividend yield fund, which looks mainly at the cash a company pays out. Growth-style funds sit at the other end: they will pay a high price for companies expected to grow fast.
SEBI's Rules for Value Funds (from 26 February 2026)
- Strategy: the scheme must follow a value investment strategy.
- Equity floor: at least 80% of total assets in equity and equity-related instruments. It was 65% before.
- Value and contra together: an AMC may now run both a value fund and a contra fund, as long as the two portfolios overlap by no more than 50%. Overlap is measured each quarter as the average of daily overlap. Under the 2017 rules an AMC could offer only one of the two. Bandhan, for example, has since launched Bandhan Contra Fund alongside Bandhan Value Fund.
- Names: scheme names must match the category name. That is why "ICICI Prudential Value Discovery Fund" became ICICI Prudential Value Fund, "HDFC Capital Builder Value Fund" became HDFC Value Fund, "Tata Equity PE Fund" became Tata Value Fund and "Bandhan Sterling Value Fund" became Bandhan Value Fund.
- Deadline: existing schemes had six months, to 26 August 2026, to comply. (The longer three-year glide path in the circular applies only to overlap limits for sectoral and thematic funds.)
The higher equity floor makes little practical difference to the large value funds. As the table below shows, all five already held between 93% and 99% in equity in August 2026.
For the other half of this rule change, see our guide to contra funds, and our explainer on the 50% portfolio overlap cap.
Five Value Funds Compared
| Fund (current name) | 1Y | 3Y | 5Y CAGR | 10Y | TER (BER) | AUM | Equity |
|---|---|---|---|---|---|---|---|
| HDFC Value Fund | 5.88% | 15.27% | 13.25% (15.00%) | 14.00% | 1.11% (0.87%) | ₹8,265.95 Cr | 99.2% |
| ICICI Prudential Value Fund | −5.79% | 10.80% | 13.22% (15.40%) | 14.00% | 1.09% (0.80%) | ₹60,074.56 Cr | 96.3% |
| Nippon India Value Fund | −3.45% | 12.79% | 12.76% (14.76%) | 14.59% | 1.28% (0.90%) | ₹9,042.97 Cr | 98.2% |
| Tata Value Fund | 0.94% | 12.14% | 12.65% (14.57%) | 13.80% | 1.07% (0.69%) | ₹8,655.69 Cr | 94.7% |
| Bandhan Value Fund | −0.93% | 9.54% | 12.41% (14.10%) | 14.91% | 0.98% (0.62%) | ₹9,981.11 Cr | 93.4% |
Direct plan, growth option. Returns are point-to-point from AMFI NAVs to 28 September 2026; 3-, 5- and 10-year figures are annualised. The 5-year figure in brackets is to 31 August 2026. TER is the total expense ratio of the direct plan (24–28 September 2026); BER, in brackets, is SEBI's base expense ratio, which excludes statutory levies. AUM and equity share as of 31 August 2026.
Benchmark: the Nifty 500 TRI returned 9.14% a year over five years and 12.67% a year over ten years to 28 September 2026.
What the table shows
- Five-year returns are tightly bunched, between 12.4% and 13.3% a year, and all five are above the Nifty 500 TRI's 9.14%.
- Over ten years, all five are between 13.8% and 14.9%, again above the index's 12.67%.
- The last year is where they split. One-year returns run from −5.79% to 5.88%. One-year figures say more about current positioning than about skill.
- One month moves the numbers. One-year returns to 31 August were far higher for most funds (for example ICICI −0.27% and Nippon 4.10%, against −5.79% and −3.45% a month later), and every fund's 5-year return was 1.7 to 2.2 points higher. Compare funds over identical dates.
- Size varies a lot. ICICI Prudential Value Fund is about six times the size of the next-largest fund in this table.
You can test any value fund over your own dates with the mutual fund analyser, which uses AMFI NAVs.
Who Runs Them
A value strategy depends on judgement about what a business is worth, so the people matter. As of September 2026:
- HDFC Value Fund: Anand Laddha, with Dhruv Muchhal for overseas holdings.
- ICICI Prudential Value Fund: Sankaran Naren, Dharmesh Kakkad, Masoomi Jhurmarvala and Sharmila D'Silva.
- Nippon India Value Fund: Meenakshi Dawar and Dhrumil Shah, with Amber Singhania and Kinjal Desai from March 2026.
- Tata Value Fund: Sonam Udasi.
- Bandhan Value Fund: Daylynn Pinto, Ritika Behera and Gaurav Satra.
How to Judge a Value Fund
- Long periods, same end date. Value strategies can lag for years and then catch up quickly. Five- and ten-year returns against the Nifty 500 TRI say more than one- or three-year figures.
- Consistency of approach. Read the manager's commentary in the monthly factsheet. Is the fund still buying what it says it buys, or drifting toward whatever has been rising?
- Total expense ratio. Direct-plan TERs here range from 0.98% to 1.28%. Our guide to direct vs regular plans shows what the regular plan adds on top.
- Overlap with what you own. Value funds often hold large banks and other big companies that also sit in flexi-cap and large-cap funds. Check before adding one.
- Manager continuity. A recent change, as at Nippon in March 2026, means part of the record was built by others.
Our guide on how to choose a mutual fund covers the general checklist.
Where Value Funds Tend to Fit
Value funds are often held alongside a diversified fund, such as a flexi-cap or index fund, to add a different style. When markets are led by fast-growing, expensive companies, value funds tend to lag; when out-of-favour sectors recover, they tend to catch up. Neither phase can be timed reliably, and the gap between styles can last several years.
That makes value funds hard to hold for anyone who reviews performance every few months. A regular SIP spreads purchases across both phases; the SIP calculator shows what different long-term return assumptions mean for a monthly amount, and the XIRR calculator gives your actual return from your own transactions.
How Value Funds Are Taxed (Tax Year 2026-27)
With more than 65% in Indian listed shares, value funds are equity-oriented funds for tax:
- Held more than 12 months: 12.5% on long-term gains above ₹1.25 lakh a year (one limit across all your equity funds and shares).
- Held 12 months or less: 20%.
- IDCW payouts: taxed at your slab rate, with 10% TDS if they exceed ₹10,000 a year from the fund.
Add 4% cess and any surcharge. Our mutual fund tax guide has worked examples.
