These 5 equity funds got upgraded to 4 stars this month

Summary: Not all funds are created equal, and Value Research's monthly review makes that clear. This month, five equity funds earned a step up in ratings, from three stars to four, on the back of consistent outperformance against their benchmarks and peers.

In the first week of every month, Value Research conducts a rigorous performance review of mutual funds, reassessing ratings based on how funds have actually performed relative to their peers and benchmarks. There are no second chances, no grade curves. Some funds rise, others fall and the ratings reflect exactly that.

This month, five equity funds passed the test with flying colours, moving up from three stars to four. But before we get to the names, it's worth understanding what that upgrade actually means, and how Value Research arrives at its ratings in the first place.

How Value Research rates mutual funds

The ratings aren't arbitrary; they follow a clear, consistent methodology.

• For every fund within a category, Value Research calculates individual ‘Return Scores’ and ‘Risk Scores’.
• The Risk Score is subtracted from the Return Score to produce a composite, risk-adjusted performance measure. This ensures funds aren't rewarded simply for taking on more risk.
• Scores across two time periods are then combined to arrive at a single, holistic assessment of each fund's standing within its category.

For equity and hybrid funds, the five-year score carries a 60 per cent weight and the three-year score carries a 40 per cent weight.

For debt funds, on the other hand, the three-year score carries a 60 per cent weight and the 18-month score carries a 40 per cent weight.

Funds without a full five-year (or three-year, for debt) history are evaluated solely on the shorter available period.

With that framework in mind, here are the five equity funds that earned their upgrade this month.

#1 Aditya Birla Sun Life Flexi Cap Fund

One of the oldest funds in the flexi-cap category, the Aditya Birla Sun Life Flexi Cap Fund has quietly built a solid track record. Not only does it rank among the top 10 flexi-cap funds in terms of three-year SIP returns, but the fund also posted 8.3 per cent returns in the past one year, compared to the benchmark’s (BSE 500 TRI) 4.3 per cent and category’s 5.5 per cent.

In terms of risk, too, the fund has fared slightly better. Its three-year standard deviation (a measure of volatility) stood at 14.85 per cent, while that of the category and benchmark stood at 15.4 per cent and 15.5 per cent, respectively, for the same time period.

#2 Bank of India Large Cap Fund

A relatively newer entrant in the large-cap space, the Bank of India Large Cap Fund hasn't yet completed five years. But what it lacks in history, it more than makes up for in performance. 

It currently ranks first among large-cap funds in three-year SIP returns. Moreover, it delivered a return of nearly 11 per cent in the last one year, while its benchmark, the BSE 100 TRI, gave just 1.7 per cent. 

However, the fund is highly volatile, with a three-year standard deviation of 16.3 per cent, while that of the category and the benchmark stood at 15.4 per cent and 14.5 per cent, respectively.

#3 Mahindra Manulife Multi Cap Fund

Thanks to its consistent performance, the Mahindra Manulife Multi Cap Fund has earned another rating upgrade. Earlier, the fund had jumped from two to three stars in November 2025 and today, it has bagged a four-star rating.

The upgrade is justifiable, as the fund ranks fifth and second in three-year and five-year SIP returns, respectively. Its performance in the last one year has also been impressive, delivering returns of 11.4 per cent, versus the benchmark’s (VR Multicap TRI) 5.4 per cent. 

#4 ICICI Prudential Midcap Fund

Among mid-cap funds, the ICICI Prudential Midcap Fund stands out, ranking first and third in terms of three-year and five-year returns, respectively. What’s more, its one-year returns of nearly 25 per cent comfortably beat the index’s (BSE 150 Midcap TRI) 8.6 per cent and the category’s 10.4 per cent returns.

However, as is the case with mid-cap funds, the ICICI Prudential Midcap Fund carries significant risk, with a three-year standard deviation of 18.7 per cent.

#5 Sundaram Small Cap Fund

Despite getting upgraded to four stars, the Sundaram Small Cap Fund has trailed its category for the most part during five-year and 10-year periods. 

Yet, when compared to its benchmark, the BSE 250 SmallCap TRI, the fund has consistently done better across one-year, three-year, five-year and 10-year periods, albeit by small margins.

Invesco India Large Cap Fund: The fund that earned five stars

Invesco India Largecap Fund was the only fund this month that earned the coveted five-star rating from us. While its recent performance has been subdued, its three-year and five-year returns of 17.2 per cent and 15.3 per cent have been strong, outpacing the large-cap category and the benchmark (BSE 100 TRI) by a substantial margin. And though it reported a one-year return of just 3.4 per cent, the fund fared much better than its peers, who returned only 2.2 per cent during the same period.

Should you invest in any of the abovementioned funds?

A rating upgrade is a signal worth paying attention to, but it's only the starting point. Whether any of these funds deserve a place in your portfolio depends on factors such as your financial goals, risk appetite, investment horizon and existing asset allocation. To get a personalised recommendation backed by expert analysis, subscribe to Value Research Fund Advisor and find out exactly where these funds fit, or don't fit, in your financial plan.

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