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

 If you’re thinking about investing in mutual funds, first understand what the fund actually does with your money. It also helps to compare its long-term returns with other funds in the same category.

Here’s a look at the top-performing value mutual funds (direct plans) that have returned more than 15% a year over the past five years.

What are value mutual funds?

Value mutual funds buy stocks that look cheap compared to what the companies are really worth. The idea is to pick good businesses at attractive prices and gain when the market eventually catches on.

These funds usually carry higher risk, because one wrong stock pick can hurt the whole portfolio. Preeti Zende, founder of Apna Dhan Financial Services, said they need patience. “Only use value funds for long-term goals that are more than 10 years away. They can lag growth funds for long stretches before the strategy pays off. Value investing isn’t about buying cheap stocks. It’s about buying good businesses at the right price,” she said.

Around eight value funds have returned more than 15% a year over the last five years. Most of these top direct mutual funds delivered between 15% and 18% annually.