What the stars are for
A fund screen lists thousands of schemes. The 1 to 5 star rating is a quick way to see where one fund stands inside its own peer group, without reading four columns. It is not a rating from SEBI or a rating agency, and it says nothing about the future. This post rebuilds two real ratings from the inputs stored for them, as of the NAV of Wednesday 15 October 2026.
Step 1: choose the peer group
Every fund is ranked only against funds with the same sub-category, plan and option: Direct Growth flexi caps against Direct Growth flexi caps, and so on. Direct plans are kept apart from Regular because their returns are structurally higher, and IDCW options are not rated at all, because every payout lowers the NAV. Two fallbacks keep a fund from going unrated. A fund too young for a 3-year return is ranked on its 1-year return and marked "1Y". A fund whose sub-category has fewer than five funds is ranked across its wider category and marked "CAT".
Step 2: four percentiles
Within that group the fund gets a 0 to 100 percentile on four things, where 100 is the top of the group:
| Component | Weight | What is ranked |
|---|---|---|
| Performance | 60% | Mean of the 3-year CAGR percentile and the rolling 3-year average percentile |
| Risk | 15% | Trailing 3-year volatility, lower ranks higher |
| Cost | 10% | Expense ratio, lower ranks higher |
| Downside | 15% | Worst fall in the trailing 3 years, shallower ranks higher |
All four use the same three-year window, so an old fund is not penalised for having lived through 2020 when a young one has not. A component the fund does not have, such as an expense ratio not yet on file, is scored at 50, the middle of the group. Performance is the exception: without any return there is no rating.
Step 3: weight, rank again, band
The weighted mean of the four is the composite. A mean of four percentiles bunches towards 50, so the composite is ranked again within the group, and that second percentile is the score the bands cut:
- 5 stars: a score of 90 and above, the top 10%
- 4 stars: 67.5 to 90
- 3 stars: 32.5 to 67.5
- 2 stars: 10 to 32.5
- 1 star: below 10
So 5 stars means roughly the top tenth of the peer group, and 3 stars the middle 35%.
Worked example 1: Parag Parikh Flexi Cap, 5 stars
Parag Parikh Flexi Cap Direct Growth had a 3-year CAGR of 12.03%. That put it 16th of the 36 Direct Growth flexi caps with a 3-year record, a little above the middle. Its stored percentiles:
| Component | Percentile | × weight |
|---|---|---|
| Performance | 71.4 | 42.86 |
| Risk (volatility 9.89%) | 100.0 | 15.00 |
| Cost (expense ratio 0.69%) | 95.1 | 9.51 |
| Downside (3-year max fall −10.98%) | 100.0 | 15.00 |
| Composite | 82.37 |
Ranked against the composites of its 36 peers, 82.37 became a score of 97.6, and 97.6 is in the 5-star band. The performance percentile is higher than the 16th-place CAGR suggests because its rolling 3-year average, 19.05%, ranks well; the two are averaged. The rest came from being the least volatile flexi cap with the shallowest 3-year fall. A middling recent return and five stars are not a contradiction: 40% of the score is not about return.
Worked example 2: Nippon India Small Cap, 3 stars
Nippon India Small Cap Direct Growth had a 5-year CAGR of 16.75%. Its percentiles among 26 small caps with a 3-year record: Performance 58.8, Risk 60.0, Cost 80.0, Downside 40.0. The composite works out to 58.27. Ranked within the group, that became a score of 66.67, which is 0.83 below the 67.5 line for four stars. The bands are hard lines, and two funds a fraction apart can sit a star apart.
Young funds and the "1Y" marker
Motilal Oswal Small Cap Direct Growth began in December 2023 and has no 3-year return. It carries 5 stars ranked on its 1-year return of 18.64% against 31 small caps, and the star shows a "1Y" marker wherever it appears. A rating built on one year is a weaker claim than one built on three. That marker is there so you can discount it.
Where you see the rating
- On a fund page, the Scorecard shows the stars, how many peers the fund was ranked against, and a bar of the four weights; "How this is computed" opens the details.
- On the classic screener and category lists the Rating column sorts by the score, so funds with the same stars still have an order.
- The Terminal (free account) has a "Cat %ile" column with the performance percentile alone.
Ratings are recomputed once an hour, at the end of the data refresh. The star rating section of the methodology page has the full rules, and the star rating glossary entry the short version.
What a star does not mean
A 5-star small cap and a 5-star liquid fund have nothing in common except that each beat its own peers. Stars do not tell you whether a category suits your goal, and they move as peers' numbers move. What the five-star funds show looks at how 5-star funds differ from 4-star ones across the site. Before relying on stars, compare the underlying rows; comparing two funds side by side gives an order for that. None of this is a recommendation.
Frequently asked questions
How is the WealthTicker star rating calculated?
Each fund gets four percentiles within its own sub-category, plan and option: performance (60% weight), volatility (15%), expense ratio (10%) and 3-year drawdown (15%). The weighted mean is ranked again within the same group, and that rank sets the stars: 90 and above is 5 stars, 67.5 to 90 is 4, 32.5 to 67.5 is 3, 10 to 32.5 is 2 and below 10 is 1.
Can a fund with average returns get 5 stars?
Yes, because returns are 60% of the score, not all of it. On 15 October 2026 Parag Parikh Flexi Cap Direct Growth ranked 16th of 36 flexi caps on 3-year CAGR, but it was the least volatile, among the cheapest and had the shallowest 3-year fall in the group. Its final score of 97.6 put it in the 5-star band.
How often do the star ratings change?
They are recomputed once an hour, as the last step of the site's hourly data refresh, after NAVs, returns and expense ratios have been updated. They are not recomputed on the 15-minute NAV checks, so a rating does not flicker within the hour.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
Keep reading
WealthTicker home page: what each block shows
A tour of the home page: the plain-English fund search, the counters, the top-funds list, NFOs and the Market Pulse ticker, with how fresh each one is.
Mutual fund category rankings: how the lists are built
Each 'Best' category page ranks Direct Growth funds by 3-year CAGR and refreshes within the hour. How it works, and what the ELSS list shows on 15 October 2026.
Mutual fund Terminal: filter and sort every fund at once
The Terminal loads 1,810 Direct Growth funds into one table with about 35 filters that apply as you type. A free account opens it. A flexi-cap example.