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Summary: Five equity funds have earned a perfect five-star rating August, spanning large & mid-cap, mid-cap, multicap and small-cap categories. The list reveals which funds have combined strong returns with risk-adjusted performance to reach the top
We're back with our rating report card, and this time, there's extra reason to sit up: not one, but five equity funds have bagged a perfect five-star score from us.
That's not common, since Value Research Fund Rating rewards consistency across both returns and risk, not just a strong run in one period. Here's who made the cut this time and what actually pushed each of them to the top.
How does Value Research Fund Rating work?
Before the list, a quick refresher on our methodology. The Value Research Fund Rating combines return and risk into one number; it's purely quantitative, with no subjective calls involved.
For every fund in a category, we calculate an Individual Return Score and a Risk Score. Subtracting the Risk Score from the Return Score gives a risk-adjusted performance measure, which is the basis of the rating.
- For equity and hybrid funds, the five-year score gets a 60 per cent weight and the three-year score gets 40 per cent.
- For debt and arbitrage funds, it's three years (60 per cent) and 18 months (40 per cent).
- Funds without the longer history are simply judged on whichever shorter period they have.
These composite scores then translate into star ratings.
Now, let’s look at the five funds that received a perfect five-star rating this month.
#1 Invesco India Large & MidCap Fund
The Invesco India Large & MidCap Fund ranks first over three years and second over five years, with SIP returns of 17.2 per cent and 20.7 per cent respectively, comfortably ahead of the benchmark, BSE 500 TRI. That performance hasn't come cheap on the risk side, though: its standard deviation (a measure of volatility) of 18.4 per cent marks it out as a fairly volatile fund.
Notably, on a five-year rolling basis it lagged its category for years before only recently pulling ahead.
#2 HSBC Midcap Fund
This fund tops both the three-year (21.2 per cent) and five-year (23.6 per cent) SIP return charts. Its longer-term record is less flattering, though, since it trailed the BSE 150 Midcap TRI and its category for years before pulling clear only since April 2026.
The HSBC Midcap Fund also leads in terms of alpha, generating 7.7 per cent versus the category's 1.55 per cent.
#3 Invesco India Mid Cap Fund
Here is another mid-cap fund that has made it to our list. And why not, since it sits second over three years (18.9 per cent) and five years (22.7 per cent), and numero uno over 10 years, in terms of SIP returns.
The Invesco India Mid Cap Fund has beaten its benchmark by close to four percentage points a year more often than not, and its roughly 20 per cent annualised return over a decade keeps it ahead of the index too.
#4 Axis Multicap Fund
The Axis Multicap Fund completed five years this year and has already earned five stars. This is evident in its performance: it ranks first on three-year SIP returns (15.2 per cent) and has stayed meaningfully ahead of its category and benchmark, the VR Multicap TRI, without leaning on any single dominant stock.
#5 ITI Small Cap Fund
ITI Small Cap Fund, now six years old, ranks second on three-year (20.7 per cent) and first on five-year SIP returns (24.6 per cent). It trailed its category and benchmark (BSE SmallCap 250 TRI) for a long stretch before starting to pull ahead this year. Its alpha of 10.8 per cent towers over the category average of 3.3 per cent, and it has managed this with lower volatility than both its peers and the index.
The funds that earned four stars
Besides the above list, there were two funds that upgraded from three to four stars, and are worth keeping an eye on:
Should you invest in any of the abovementioned funds?
A five-star rating is a useful starting point, not a decision in itself. Before putting money into any of these funds, it's worth weighing:
- Your own risk appetite
- Your investment time horizon
- Your budget
- Your broader financial goals
This is where expert guidance helps. Value Research Fund Advisor can take the guesswork out of it with tailored recommendations and real-time portfolio analysis, so your decision fits your money, not just the rating.
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