5-star equity funds: 16.2% a year over 3Y; 1-star: 8.0%

What the ratings are

WealthTicker rates each fund from one to five stars within its peer group, using performance, risk, cost and downside behaviour. How the star ratings are calculated sets out the method. A fund with three years of history is rated on three years; younger funds are rated on one.

On 21 October 2026 the ratings were last recomputed, and the spread of stars among Direct Growth funds (Growth option, no IDCW twin, excluding ETFs and segregated portfolios) looks like this:

Each column follows a bell shape: the middle rating, three stars, is the biggest group everywhere, and five stars is about 11–12% of each category. Equity has 61 five-star funds out of 546 (11.2%) and 59 one-star (10.8%).

What the five-star funds have delivered

Take the 420 equity funds rated on a three-year basis, and group them by their star count. Median figures per group:

Each step up the star ladder comes with a higher median return, a higher Sharpe ratio and, apart from the 2★/3★ pair, a shallower fall. The gap between the top and bottom groups is 8.3 percentage points a year over three years and 5.7 points over one year.

The one-year figures are negative at every level: even five-star equity funds have a median of -1.03% in the 12 months to October 2026. A good rating has not been a shield; it has been a smaller loss. For the market backdrop see the equity category scorecard and the funds with a negative one-year return.

A caution on circularity

The three-year return is one of the things that earns a fund its stars. So the 8.3-point gap in three-year return is partly the rating restating itself. The more informative cells are the ones not used to build the rating in the same way, such as the one-year return (5.7 points apart) and the drawdown. Even there, funds that held up better over three years may have kept doing so; it is a persistence story, and it can end.

Another limit: 126 equity funds are rated on one year only, because they have not been around for three. They are in the 546 above, not in the medians table.

Using the rating well

• Compare within a category. A five-star small-cap fund and a five-star large-cap fund are strong in different peer groups; the stars are not comparable across them.
• Use it to shortlist, not to decide. The rating cannot see a manager change, a merger or a mandate shift.
• Check cost and risk separately. The fund page shows the expense ratio, volatility and drawdown behind each rating.

On the site, the star filter sits in the screener, and the example of ranking a fund among its peers walks through a single case. The fund house view looks at the same question by AMC.

Figures are medians for Direct plan Growth-option equity funds, computed on 21 October 2026 from the WealthTicker database. Past rating and return are not a forecast.