Value Research Ratings: Two funds just got upgraded to 4 stars

Value Research Ratings: 2 funds just got upgraded to 4 stars

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Value Research Ratings: Two funds just got upgraded to 4 stars Aman Singhal/AI-Generated Image

Summary: This month’s Value Research Ratings reveal the quiet performers that have steadily delivered stronger returns without taking on excess risk. Apart from the newly-crowned four-star funds, we also list the three funds that have seen their ratings get jacked up from two stars to three.

New month, new ratings. And as always, Value Research’s philosophy stays the same: no knee-jerk reactions to short-term performance.

Most funds retain their previous ratings because a star upgrade is never triggered by a sudden burst of performance. Yet, every month brings a fistful of quiet climbers that have earned a bump-up through consistency, risk discipline and resilience.

This month is no different.

But before we get to the standout performers, a quick refresher is essential on how Value Research hands out its stars.

A quick word on Value Research Ratings

They give you a quick, objective sense of how a fund has performed — not just by looking at returns, but by evaluating how much risk the fund took to earn those returns.

In short, each rating reflects two things blended into one score:

The returns delivered, and
The risk taken to deliver them.

This creates a risk-adjusted score, which we then compare with other funds in the same category.

How we calculate it:

Equity & hybrid funds: A mix of three-year and five-year performance (60 per cent weight to five-year, 40 per cent to three-year).
Funds without a five-year history: Rated only on three-year data.

But remember that ratings are a starting point, not the final verdict. They help you shortlist funds, but your goals, time horizon and tolerance for volatility matter just as much. Sometimes, even a two- or three-star fund may be the right choice.

With that context in place, here are the two funds that earned an upgrade this month.

1. SBI Focused Fund: 3 stars to 4

SBI Focused Fund has had a solid 2025, delivering 14.9 per cent returns so far this year, far ahead of the 8 per cent delivered by the BSE 500 TRI, our proxy for the market.

Zoom out to the last 12 months and the story gets even better. The fund has been the top-performing focused fund, clocking a 16.8 per cent annualised return.

Even on a longer consistency lens, considering only funds with at least a 10-year history, SBI Focused Fund’s direct plan stands out. Between November 2020 and November 2025, it posted 17.5 per cent average five-year returns, higher than the BSE 500 TRI’s 16.7 per cent annualised return.

And then we looked at downside protection. This is important because focused funds can struggle on this front, as they are mandated to have a concentrated portfolio of up to 30 stocks only. Such high concentration can lead to volatility since the portfolio is reliant on not more than 30 stocks. Yet, the SBI Focused Fund has been an exception. Over the last five years, it has been the second least volatile fund in the category, falling only 7 per cent whenever the market fell 10 per cent. Such performance is comparable to their more diversified flexi-cap peers.

In short, a stellar last 12 months, strong long-term consistency, and lower-than-expected volatility. No surprise it earned its fourth star.

2. Mahindra Manulife Mid Cap Fund — 3 stars to 4

If SBI Focused Fund’s story is about recent strength, Mahindra Manulife Mid Cap is the opposite. Its longer-duration performance is what shines.

The fund, launched in January 2018, has been the fifth-best performer over the last five years, with its direct plan delivering a powerful 28.7 per cent return.

On volatility, we examined its standard deviation, which is a metric that tells you how much a fund’s returns typically vary. The fund’s standard deviation is 15.4 per cent, slightly lower than the category average of 15.6 per cent.

What does that mean in plain English? It means Mahindra Manulife Mid Cap’s returns fluctuate less than the average mid-cap fund, despite delivering stronger long-term performance. In a category known for sharp ups and downs, that stability matters. Add it all up, and the four-star upgrade makes sense.