Are unrated funds riskier?

I want to invest ₹5,000 per month for five years. I am considering SBI Pharma Fund and UTI Transportation and Logistics Fund. These schemes are unrated. Are they riskier than the rated schemes?
- Ravi

Value Research does not rate equity or hybrid funds if they don't have a performance record of minimum three years. We also do not rate a category if it doesn't have at least 10 schemes. Pharma category has only four funds, so they are not rated. UTI Transportation and Logistics Fund, essentially an auto fund, is also not rated for the same reason.

Value Research Fund Rating (Risk-adjusted Rating) is a convenient composite measure of both returns and risk. It is purely quantitative and there is no subjective component to the Fund Rating. The assessment does not reflect Value Research's opinion of the future potential of any fund. It only gives a quick summary of how a fund has performed historically relative to its peers.

This article was originally published on December 09, 2015.