One small-cap fund just earned a four-star rating from us

Summary: A major small-cap fund just earned a rating upgrade from three to four stars. We also bumped up a large & mid-cap fund’s ratings. So, let’s find out the identity of both these funds… Every month, we reassess every mutual fund in the country and update its star rating. Our fund ratings are designed to make life easier for investors. They offer a quick and objective way to identify funds that have delivered strong risk-adjusted performance compared to their peers. Put very simply, our rating is a single score that combines two things: How much return a fund has delivered How much risk it took to deliver those returns The result is a risk-adjusted return score, which is then compared with all other funds in the same category. A five-star fund is among the best in its category on this measure; a one-star fund is among the worst. For equity and hybrid funds, we combine the fund’s three-year and five-year risk-adjusted scores (60 per cent weight for five-year, 40 per cent for three-year) to get a single number. Funds without a five-year history are rated purely on their three-year numbers. For debt funds, we use 18 months of weekly data. It’s important to note: a star rating is a starting point, not the final word. A good