5 mutual funds bag five-star rating: How Invesco, HSBC, Axis and ITI funds performed

Five equity mutual funds across large & mid-cap, mid-cap, multicap and small-cap categories have secured a five-star rating for August, according to an analysis by Value Research. The top-rated funds stood out for their combination of strong returns and risk-adjusted performance across different time periods.

The Invesco India Large & MidCap Fund ranked first over three years and second over five years, with SIP returns of 17.2% and 20.7%, respectively. Its performance, however, has come with relatively high volatility, with a standard deviation of 18.4%. The fund had also lagged its category on a five-year rolling basis for several years before recently moving ahead.

The HSBC Midcap Fund topped the three-year and five-year SIP return rankings, delivering 21.2% and 23.6%, respectively. Its alpha stood at 7.7%, compared with 1.55% for the category. Its longer-term record was less consistent, with the fund trailing its benchmark and category for years before pulling ahead from April 2026.

Mid-cap funds deliver strong returns

The Invesco India Mid Cap Fund secured the third spot on the list, ranking second over three years with a 18.9% SIP return and second over five years at 22.7%. It ranked first over 10 years.

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The fund has beaten its benchmark by close to four percentage points a year more often than not, according to the analysis. Its roughly 20% annualised return over a decade has also kept it ahead of the index.

The Axis Multicap Fund, which completed five years this year, also received a five-star rating. It ranked first on three-year SIP returns at 15.2% and remained meaningfully ahead of its category and benchmark, the VR Multicap TRI. Its performance has not relied on any single dominant stock.

ITI Small Cap stands out on alpha

The ITI Small Cap Fund, now six years old, ranked second on three-year SIP returns at 20.7% and first on five-year SIP returns at 24.6%.

The fund had trailed its category and benchmark, the BSE SmallCap 250 TRI, for a prolonged period before beginning to pull ahead this year. Its 10.8% alpha was substantially above the category average of 3.3%. It also delivered this performance with lower volatility than both its peers and the index.

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How the rating is calculated

The rating combines returns and risk into a quantitative measure. For equity and hybrid funds, the five-year period carries a 60% weight, while the three-year period carries 40%.

Two funds—Edelweiss ELSS Tax Saver Fund and HDFC Value Fund—were upgraded from three to four stars.

A five-star rating, however, is not a standalone investment recommendation. Investors need to consider their risk appetite, investment horizon, budget and broader financial goals before selecting a fund.

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