The Great Indian Value Factor: Same Surname, Different DNA
For starters This is Value factor and not Value Investing. These are 2 separate things. Value factor only concerns with raw data. Cheap on the basis of P/B. PE or a dividend yield.
Welcome to the Bharat Darshan of Value Factor indices — where three indices are like 3 brothers in a joint family, all claiming to be “Value,” and then spend the next 10 years behaving like strangers with unresolved family trauma.
Meet the cast:
- NIFTY500 VALUE 50: The wild-child. High risk, high drawdown, high drama.
- NIFTY200 VALUE 30: The Middle child.
- NIFTY50 VALUE 20: The odd one out — not just “Value,” but a closet “Quality” investor too. Yeah, this one mixes in 40% weight to ROCE (Return on Capital Employed). Basically, “Frugal and hygienic”.
Problem with Value as a factor is that more the price of a stock falls, attractive it becomes and so by definition you will have a lot of duds in the portfolio which are down for a genuine reason and will NOT revert to its mean.
NIFTY50 VALUE 20 is different, it solves for that problem by adding Quality tinge to the equation (WB wud be so proud, lol)
Same Gharana, Wildly Different Raagas
Let’s talk performance. Based on historical data:
Nifty200 and Nifty500 value indices are like twins who got lost in Kumbh Mela and had a Milan 10 years later. They are practically same. Meanwhile, the Nifty50 VALUE 20 — the “Quality + Value” hybrid — didn’t grow as fast but fell less dramatically during drawdowns. In short: less sexy, more stable.
The SIP Illusion: Pain Now, Pleasure Later
So far, this looks like a No brainer, Nifty 50 value 20 has better Risk Adjusted returns but!!!
Now comes the real psychological rub.
You see, the crazy drawdowns in the wilder indices like NIFTY500 VALUE 50 actually help SIP investors.
Yes, pain is a feature, not a bug.
Because when you fall 67%, you get to buy more units for cheap. So over time, your SIP XIRR becomes the actual alpha generator — thanks to good ol’ Rupee Cost Averaging
It’s like dating someone wildly unstable .Sure, there’s chaos, but the sex is divine.
So What Do You Pick, Baba?
If you’re building a product or picking a value index to ride off into the investing sunset:
- Do you want Nifty50 VALUE 20, the calm, composed elder sibling who won’t party hard but also won’t throw your portfolio off a cliff?
- Or do you choose Nifty500 VALUE 50, the wild, erratic genius who might lose your money in Year 1 or 2 and may be even 3 but make you look like a SIP god by Year 10?
Tough choice, right?
Well, that’s investing for you. Not spreadsheets. Psychology.
Final Thought:
As Uncle Buffett said, “Price is what you pay, value is what you get.”
In India, you also get drawdowns, delayed gratification, and strange index constructions.
Pick your poison — or better, build a blend. Because Value alone is never enough. It’s how you endure its moods that defines your returns.
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