These value mutual funds delivered the highest returns in 5 years. Should you invest?

 If you are planning to invest in mutual funds, it is important to understand a fund's investment strategy before investing. Comparing its long-term performance with peers in the same category can also help you make a more informed decision.

Here's a look at the top-performing value mutual funds (direct plans) that have delivered more than 15% annualised returns over the past five years.

What are value mutual funds?

Value mutual funds invest in stocks they consider undervalued relative to their intrinsic value. The idea is to buy quality companies at relatively attractive valuations and benefit as the market eventually recognises their true value.

Typically, these funds carry higher risk because choosing the wrong stock can have a substantial impact on the portfolio's return. “You should invest in value funds only for your long-term goals, which are over 10 years away, as these fund strategies require patience. These funds may underperform growth funds for extended periods before their investment thesis plays out. Value investing isn't about buying cheap stocks—it's about buying good businesses at the right price,” says Preeti Zende, Founder of Apna Dhan Financial Services.

There are around eight value mutual funds that have delivered an annualised return of over 15% in the past five years. Most of these high-performing direct mutual funds delivered returns of 15-18% per annum.