Value funds: Only two schemes have negative alpha; Quant and DSP lead category in benchmark outperformance
Value funds invest in stocks that are undervalued compared with their intrinsic worth. These schemes typically look for companies trading at relatively lower valuations with the expectation that the market will eventually recognise their true value.
Under the Securities and Exchange Board of India (SEBI) categorisation rules, value funds are required to invest at least 65% of their assets in stocks, with a focus on a value investing strategy.
However, not all value funds have delivered the same level of performance. While some schemes have generated strong positive alpha by outperforming their benchmark indices, only two value funds have negative alpha.
Value funds with negative alpha
| Fund | Alpha (%) |
| Sundaram Value Fund | -3.36 |
| Baroda BNP Paribas Value Fund | -1.33 |
*Source: Value Research, Direct plans, Data as on 31 July 2026, Alpha have been calculated using calendar month returns for the last three years.
Among all value funds, only Sundaram Value Fund and Baroda BNP Paribas Value Fund are shown to have negative alpha.
Alpha measures how much a mutual fund has outperformed or underperformed its benchmark after accounting for market risk.
- Positive alpha means the fund outperformed its benchmark.
- Zero alpha means the fund delivered returns broadly in line with its benchmark.
- Negative alpha means the fund underperformed its benchmark.
For example, if a benchmark delivered a return of 20% over a given period and a fund generated 16.64%, it had underperformed the benchmark by 3.36 percentage points, resulting in an alpha of -3.36.
Value funds with the highest positive alpha
At the other end of the spectrum, these two value funds lead in alpha generation.
| Fund | Alpha (%) |
| Quant Value Fund | 8.23 |
| DSP Value Fund | 6.75 |
*Source: Value Research, Direct plans, Data as on 31 July 2026, Alpha have been calculated using calendar month returns for the last three years.
Quant Value Fund and DSP Value Fund have the highest positive alpha of 8.23 and 6.75, respectively. This indicates that they outperformed the benchmark index during the period.
Returns comparison – Negative vs positive alpha value funds
| Fund | 1-year return (%) | 3-year return (%) | 5-year return (%) |
| Sundaram Value Fund | -3.25 | 7.74 | 10.10 |
| Baroda BNP Paribas Value Fund | 2.08 | 10.19 | – |
| Quant Value Fund | 16.29 | 21.83 | – |
| DSP Value Fund | 12.89 | 17.45 | 14.02 |
*Source: Value Research, Direct plans, CAGR as on 31 July 2026, 5-year data not available for Baroda BNP and Quant Funds
The return performance of these funds also shows a clear contrast between schemes with negative and positive alpha.
Among the two funds with negative alpha, Sundaram Value Fund, which has the lowest alpha, delivered a negative return of 3.25% in the last one-year period. However, it gave 7.74% returns over three years and 10.10% returns over five years.
Baroda BNP Paribas Value Fund, the other scheme with negative alpha, performed relatively better and did not post a negative return over the past one year.
In comparison, the two funds with positive alpha delivered better returns. Quant Value Fund, which recorded the highest alpha, generated returns of 16.29% over one year and 21.83% over three years.
DSP Value Fund followed with returns of 12.89% over one year, 17.45% over three years, and 14.02% over five years.
Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.
