Four equity mutual funds received Value Research Fund Rating upgrades in July 2026, with JM Large Cap Fund and Quant ELSS Tax Saver Fund moving from 3 to 4 stars, while Quant Value Fund and HSBC Value Fund achieved 4 to 5 stars respectively. According to Value Research reports, these upgrades reflect improved risk-adjusted performance within their respective categories, with the ratings based on a composite measure of returns and risk that combines five-year scores (60%) and three-year scores (40%) for equity funds. The upgrades come amid broader market volatility that saw average fund returns fall 6.8% in July 2026, driven by AI infrastructure spending concerns and Middle East conflict impacts on energy prices. The AI selloff particularly affected hedge funds like Whale Rock Capital Management, which saw its main fund fall 21.7% in July, cutting its 2026 gains from 72.5% to 35.1%.
The JM Large Cap Fund has delivered 13.5% three-year returns and 12.5% five-year returns, consistently outperforming the BSE 100 TRI benchmark by over 2 percentage points annually. As reported by Value Research, the fund has maintained this lead across most periods, though it experienced volatility between August 2021 and January 2024 before recovering since December 2025. The Quant ELSS Tax Saver Fund achieved 17.4% one-year returns as of August 3, 2026, significantly outpacing the category's 7.1% and benchmark's 5%, with 16% three-year and 15.8% five-year rolling returns. These strong performances occurred despite broader market challenges that saw tech funds continue to post the highest returns over 2026 despite July's sell-off, with the IA Technology & Technology Innovation sector remaining the best performing peer group with 20.8% average gains.
The Quant Value Fund has delivered 21% returns since inception and 22.5% over three years, earning a 4-star rating despite being less than five years old. According to Value Research, this fund picked up pace from April 2026 onwards, pulling ahead of peers and the BSE 500 TRI benchmark. HSBC Value Fund achieved the highest rating jump, moving from 4 to 5 stars, ranking fourth for three-year returns and first for five-year returns with 17.5% three-year rolling returns versus the category's 14.5% and benchmark's 12.3%. These funds benefited from the market's rotation toward UK equity sectors during July, with IA UK Equity Income becoming July's best-performing peer group with 4.3% average returns, moving from 21st to 11th place. The AI selloff particularly impacted stock-picking funds that buy specific companies rather than broad indexes, with Whale Rock's trouble being part of a broader sector-wide decline affecting even multistrategy funds.
July's market volatility was primarily driven by AI infrastructure spending concerns and Middle East conflict impacts on energy prices, with the IA Asia Pacific Excluding Japan and IA Global Emerging Markets sectors holding onto second and third places respectively. However, energy funds experienced significant gains, with iShares Oil & Gas Exploration & Production UCITS ETF and others jumping into the top 100 of the Investment Association universe for 2026, up from around 400th place at the year's halfway point. Cybersecurity thematic ETFs also improved rankings after strong earnings from companies like Fortinet, while Asian and emerging market income funds benefited from their dividend-paying stock exposure in financials, telecoms, utilities and REITs, avoiding the semiconductor sell-off that hit tech-heavy markets. The AI selloff deepened after Coatue Management's hedge fund had its worst performance in more than a year, with margin requirements forcing quick selling that made prices fall faster.
