6 equity funds just got a ratings upgrade. Own any?

Summary: Among the six upgraded funds this month, one flexi-cap made the leap from three to four stars. And even as tax-saving funds lose their shine, two just earned a ratings boost. Register now to see the full list.

In the first week of every month, the Value Research Ratings pageantry comes to town. The green and red felts are out, the scores are tallied and mutual funds across the board wait with bated breath.

This month’s round brought good news for six active equity funds, all of which saw their Value Research Ratings move up a notch. Five of them climbed from two stars to three, while one fund — Mahindra Manulife Flexi Cap Fund — rose to a solid four-star rating.

But before we reveal the full list, let’s take a quick detour into what these ratings actually mean, and how you should use them.

What Value Research Ratings really mean

Our fund ratings are designed to make life easier for investors. They offer a quick, objective snapshot of how a fund has performed, not just in terms of returns, but also in how much risk it took to get there.

Put simply, our rating is a single score that blends two things:

1. Returns delivered, and
2. Risk taken to deliver those returns.

This gives us a risk-adjusted return score, which we then compare against other funds in the same category. A five-star fund ranks among the best; a one-star fund, among the weakest.

For equity and hybrid funds, we combine the three-year and five-year scores (with a 60 per cent weight for the five-year number and 40 per cent for the three-year). Funds without a five-year track record are rated on their three-year data alone. For debt funds, we use 18 months of weekly performance data.

That said, one thing you need to note is that our star ratings are a starting point, not the final word. A good portfolio doesn’t mean stacking only four- and five-star funds. Your goals, time horizon and comfort with volatility matter just as much. In fact, even a two- or three-star fund could play a useful role in the right context.

Let’s now unveil the list of upgraded funds

Here are the six equity funds with active investing strategies that got a bump in October’s update:

Spotlight on Mahindra Manulife Flexi Cap Fund

Among this month’s winners, Mahindra Manulife Flexi Cap Fund stands out for its steady outperformance, which is why it has been upgraded from a three-star to a four-star fund.

Launched in August 2021, this fund has consistently beaten both its benchmark and peers over the last three years. In three of the past four calendar years, it has been among the top-half performers in its category.

Further, in the last 12 months, when the BSE 500 TRI has slipped slightly into the red (–0.64 per cent), this fund has stayed positive with 3.04 per cent returns.

Where to find these numbers for the rest of the funds?

All the data used for this analysis, and much more, is freely available on Value Research Online. Head to the Mutual Fund Monitor page to check the latest performances, returns, ratings history and portfolio breakdowns of every fund mentioned here.

And if you’re wondering which of these funds deserves a place in your portfolio, explore Value Research Fund Advisor. It helps you identify funds that truly fit your goals, rather than just chasing star ratings.

Because remember — stars change every month, but your goals don’t.

Explore Fund Advisor Today

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