Does a higher MF rating means higher returns?
Many investors select and invest in a fund based on the ratings given by various rating agencies. They perceive that a higher rating means better returns going ahead. These ratings are actually based on the past performance of the funds that have completed a certain year of their existence, which is more than one year. Hence, you will find that one-year returns do not conform to the ratings. Therefore, you will find that funds with lower ratings might be performing better than the funds with higher ratings in the last one year.
Following table shows the ratings of the fund from different agencies and the last one-year performance of the fund along with ratings.
|
Scheme Name
|
Crisil Rating
|
MorningStar Rating
|
Value Research Rating
|
AUM (Rs Cr)
|
Wt. Rating*
|
Point to Point 1 Yr Returns (%)
|
Rank point to point Returns
|
|
Canara Robeco Bluechip Equity Fund - Direct Plan
|
5
|
5
|
5
|
3,691.25
|
5
|
54.05
|
11
|
|
IDBI India Top 100 Equity Fund - Direct Plan
|
5
|
4
|
3
|
486.26
|
4
|
58.99
|
4
|
|
Kotak Bluechip Fund - Direct Plan
|
4
|
4
|
4
|
2,945.01
|
4
|
55.8
|
8
|
|
UTI Mastershare Fund - Direct Plan
|
4
|
4
|
4
|
8,580.43
|
4
|
57.86
|
5
|
|
Axis Bluechip Fund - Direct Plan
|
4
|
5
|
5
|
29,160.60
|
5
|
52.6
|
17
|
|
Mirae Asset Large Cap Fund - Direct Plan
|
3
|
5
|
5
|
27,434.76
|
4
|
52.25
|
20
|
|
Invesco India Largecap Fund - Direct Plan
|
2
|
3
|
4
|
369.05
|
3
|
52.33
|
19
|
|
Edelweiss Large Cap Fund - Direct Plan
|
4
|
4
|
4
|
262.98
|
4
|
53.08
|
16
|
|
Franklin India Bluechip Fund - Direct Plan
|
5
|
2
|
2
|
6,463.73
|
3
|
65.81
|
1
|
|
SBI Bluechip Fund - Direct Plan
|
3
|
3
|
3
|
29,243.94
|
3
|
56.4
|
7
|
|
Navi Large Cap Equity Fund - Direct Plan
|
4
|
3
|
3
|
100.51
|
3
|
54.87
|
9
|
|
Tata Large Cap Fund - Direct Plan
|
3
|
3
|
2
|
983.31
|
3
|
59.31
|
3
|
|
Aditya Birla Sun Life Frontline Equity Fund - Direct Plan
|
3
|
2
|
2
|
21,020.31
|
2
|
57
|
6
|
|
Union Largecap Fund - Direct Plan
|
3
|
4
|
2
|
195.44
|
3
|
53.85
|
12
|
|
BNP Paribas Large Cap Fund - Direct Plan
|
3
|
4
|
5
|
1,128.86
|
4
|
49.66
|
24
|
|
IDFC Large Cap Fund - Direct Plan
|
2
|
4
|
4
|
822.96
|
3
|
47.62
|
25
|
|
PGIM India Large Cap Fund - Direct Plan
|
3
|
3
|
3
|
332.16
|
3
|
52.04
|
21
|
|
LIC MF Large Cap Fund - Direct Plan
|
3
|
3
|
3
|
568.07
|
3
|
53.72
|
13
|
|
Baroda Large Cap Fund - Direct Plan
|
3
|
3
|
3
|
45.33
|
3
|
53.55
|
15
|
|
ICICI Prudential Bluechip Fund - Direct Plan
|
3
|
4
|
4
|
28,287.57
|
4
|
53.6
|
14
|
|
L&T India Large Cap Fund - Direct Plan
|
3
|
3
|
2
|
685.05
|
3
|
50.52
|
23
|
|
HSBC Large Cap Equity Fund - Direct Plan
|
2
|
2
|
3
|
746.17
|
2
|
51.88
|
22
|
|
Nippon India Large Cap Fund - Direct Plan
|
2
|
2
|
2
|
10,523.62
|
2
|
59.74
|
2
|
|
DSP Top 100 Equity Fund - Direct Plan
|
1
|
1
|
2
|
2,845.05
|
1
|
52.5
|
18
|
|
HDFC Top 100 Fund - Direct Plan
|
1
|
2
|
2
|
19,956.83
|
2
|
54.42
|
10
|
|
JM Large Cap Fund - Direct Plan
|
4
|
4
|
4
|
49.89
|
4
|
38.28
|
28
|
|
Indiabulls Bluechip Fund - Direct Plan
|
1
|
2
|
2
|
102.52
|
2
|
42.71
|
27
|
|
Taurus Largecap Equity Fund - Direct Plan
|
2
|
1
|
1
|
31.79
|
1
|
43.69
|
26
|
*equal-weighted rating of three agencies
From the above table what we can see is that there is no correlation between ratings of the funds and their returns.
For example, Nippon India Large Cap fund has a consistent rating of two by all the agencies and the fund has delivered the second-best return in its category. Therefore, apply your discretion and go through the risk measures and portfolio before investing in a fund.