Best value funds to invest in October 2024

The value theme has been dominating the Indian stock market for the past year. He mutual funds Those who have followed the value investing strategy have offered good returns in the last year. However, fund houses that had followed the growth strategy have suffered. If you trust value investing principles, you can invest in value funds to meet your long-term needs.

If you are new to value investing, you should familiarize yourself with this style of investing and its advantages and disadvantages. A value investor tries to choose stocks that are available at cheaper valuations. These investors use various ratios and methodologies to identify such stocks. Basically, they look for stocks that are available at a discount to their real or intrinsic value. Simply put, it means that the market has not realized the true potential of these stocks and they are available at a discount.

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Value investors buy such stocks and wait for the market to discover them. When the discovery occurs, stock prices will rise and value investors will make money. It may seem simple. But it is not very easy to execute. It can take a long time for the market to figure out these stocks and it can test your patience. The discovery may not occur at all. For this reason, value mutual funds are recommended only to sophisticated investors.

The last few years had not been kind to value investing fans, as a few heavyweight stocks were driving the market. Value fund managers and investors complained that no one was paying attention to valuations. Everyone was willing to pay a premium to own the few stocks that were driving the market, they said. The trend reversed in 2021. The market rose and the rally was not driven by a handful of stocks. Most stocks participated in the rally; A broad-based rally eventually occurred. Thanks to the rally, value funds also managed to recover. However, the scarcity stage taught investors some important value investing principles.

When you follow value investing principles, there may be periods when your stocks underperform in the market. All you need to do at that time is follow your strategy and wait patiently. However, recent years have taught investors that they are not easy to follow. Many investors lost patience and sold their investments. That’s why it’s wise to limit your investments in value funds. According to investment fund managers, investors should invest a maximum of 20% in value funds. They should also remember that the market may not always pay a premium for value stocks. When the market barely takes valuations into account, value funds will underperform. If you cannot wait patiently, you should not invest in value funds.Read also | Sundaram Finance Holdings and Ashiana Housing among top 5 single stocks held by MF in September

If value investing still appeals to you, here is our list of recommended value funds to invest in in October 2024. There are no changes to our recommended schemes. Stay tuned for our monthly updates to find out if your favorite plan is doing well.

Best Value Mutual Funds to Invest in October 2024:

• Invesco India Fund Against
• Bandhan Sterling Value Fund
• Nippon India Value Fund
• ICICI Prudential Value Discovery Fund

Our methodology:
ETMutualFunds.com has employed the following parameters to shortlist the equity mutual fund schemes.
1. Average rolling returns: Shot daily for the last three years.

2. Consistency in the last three years: The Hurst exponent, H, is used to calculate the coherence of a background. The H exponent is a measure of the randomness of a fund’s NAV series. Funds with high H tend to exhibit low volatility compared to funds with low H.

i) When H = 0.5, the return series is said to be a geometric Brownian time series. This type of time series is difficult to forecast.

ii) When H < 0.5, the series is said to mean reversal.

iii) When H>0.5, the series is said to be persistent. The larger the value of H, the stronger the trend of the series.

3. Risk of falling: For this measure we have only considered the negative returns provided by the mutual fund system.
X =Returns below zero

Y = Sum of all squares of X

Z = Y/number of days needed to calculate the relationship

Downside Risk = Square Root of Z

4. Superior performance: It is measured by Jensen’s Alpha over the last three years. Jensen’s Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). A higher alpha indicates that the portfolio’s performance has exceeded the market’s expected returns.

Average return generated by the MF scheme =

[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}[Tasalibrederiesgo+BetadelesquemaMF*{(Rendimientopromediodelíndice-Tasalibrederiesgo}[RiskFreeRate+BetaoftheMFScheme*{(Averagereturnoftheindex-RiskFreeRate}

5. Size of assets: For equity funds, the threshold asset size is Rs 50 crore.

(Disclaimer: Past performance is no guarantee of future performance.)