Investing wisely is more than just a financial strategy; it's an art form that requires insight, analysis, and patience. Value investing, in particular, has garnered significant attention for its ability to unearth hidden gems in the stock market. This approach revolves around identifying stocks that are undervalued relative to their true worth, offering the potential for substantial returns over time. For mutual fund investors looking to embrace this method, there are two primary avenues: active funds and index funds.

Exploring Active Funds: The Quest for Contrarian Value

Active value funds, also known as contra funds, represent a proactive approach to value investing within the mutual fund landscape. Contrarian by nature, these funds seek opportunities that defy conventional market trends, often targeting companies with untapped potential. While their strategies vary widely, encompassing factors like historical performance, earnings, book value, cash flow, and dividend yield, their overarching goal remains consistent: to unearth value where others may overlook it.

A comparative analysis of 3-year rolling returns reveals the performance dynamics of value/contra funds against flexi-cap funds and the Nifty 500 index. While these funds have outperformed the Nifty 500, they have trailed behind flexi-cap counterparts, showcasing an average return of 13.87% versus 15.14% for flexi-cap funds and 12.43% for the Nifty 500.