Value Research has a relative rating system where it rates mutual funds within various categories. When you see a 5-star rated fund, that means it is a 5-star fund in its own category and relative to all other funds in that category. So, between a 5-star and a 4-star fund, the latter has generated lower risk-adjusted returns compared to the former in a given category.
This article was originally published on September 30, 2022.