Five equity mutual funds across various categories, including large & mid-cap, mid-cap, multicap, and small-cap, have secured a prestigious five-star rating for August, as per an analysis by Value Research. These top-rated funds distinguished themselves through a combination of robust returns and strong risk-adjusted performance over different investment horizons.
Top-Rated Funds and Their Performance Highlights
Invesco India Large & MidCap Fund
The Invesco India Large & MidCap Fund demonstrated leading performance, ranking first over a three-year period with SIP (Systematic Investment Plan) returns of 17.2%. Over five years, it secured the second position, delivering 20.7% SIP returns. However, this performance came with relatively high volatility, indicated by a standard deviation of 18.4%. Despite lagging its category on a five-year rolling basis for several years, the fund has recently moved ahead.
HSBC Midcap Fund
The HSBC Midcap Fund topped the rankings for both three-year and five-year SIP returns, achieving 21.2% and 23.6%, respectively. Its alpha, a measure of outperformance relative to its benchmark, stood at an impressive 7.7%, significantly higher than the category average of 1.55%. While its longer-term track record showed inconsistency, trailing its benchmark and category for years, it has notably pulled ahead since April 2026.
Invesco India Mid Cap Fund
Securing the third spot overall, the Invesco India Mid Cap Fund ranked second over three years with 18.9% SIP returns and also second over five years with 22.7%. Notably, it achieved the first position over a ten-year period. According to analysis, the fund has consistently beaten its benchmark by nearly four percentage points annually more often than not. Its approximately 20% annualized return over a decade has kept it ahead of its index.
Axis Multicap Fund
The Axis Multicap Fund, which recently completed five years of operation, also earned a five-star rating. It ranked first for three-year SIP returns at 15.2%, maintaining a significant lead over both its category and benchmark, the VR Multicap TRI. Its strong performance has not been reliant on any single dominant stock, indicating a diversified strategy.
ITI Small Cap Fund
The ITI Small Cap Fund, now six years old, showcased strong performance, ranking second for three-year SIP returns at 20.7% and first for five-year SIP returns at 24.6%. Although it had trailed its category and benchmark, the BSE SmallCap 250 TRI, for an extended period, it began to pull ahead this year. Its alpha of 10.8% was substantially above the category average of 3.3%, and it achieved this performance with lower volatility compared to its peers and the index.
Understanding the Rating Methodology
Value Research's rating system quantitatively combines fund returns and risk. For equity and hybrid funds, the five-year performance period carries a 60% weight, while the three-year period accounts for 40% of the overall assessment.
It's important to note that a five-star rating serves as an indicator of past performance and is not a standalone investment recommendation. Investors should always consider their individual risk appetite, investment horizon, budget, and broader financial goals before making any investment decisions. Two other funds, Edelweiss ELSS Tax Saver Fund and HDFC Value Fund, saw their ratings upgraded from three to four stars in the same period.