What mutual fund rating systems can reveal
The best information a mutual fund rating can give you is how well a mutual fund has performed in the past. That can be very helpful information as you make well-informed decisions about mutual fund purchases.
Be Sure to understand the below topics of mutual fund rankings:
Mutual Fund Companies - Different Companies that Rate mutual funds
Mutual Fund Comparison - How to compare mutual funds
Mutual Funds List - List of Mutual Funds
Mutual Fund Rankings - How ranking systems work
Top 10 Mutual Funds - Top 10 mutual funds come from different sources.
Several different companies offer mutual fund rating systems. Morningstar, for example, has been in business for 15 years and is well-known for its five star mutual fund rating system.
However, buying a mutual fund based on the rating alone is guaranteed to create problems for your portfolio.
What a mutual fund rating can’t tell you.
Star ratings are a quick and easy way to get a feel for a fund's historical performance. However, no matter how many stars a mutual fund receives, it does not reflect management turnover, strategy shifts, and rising expenses. In other words, a fund's future doesn’t always reflect its past
Do it yourself
The best thing to do is to create your own mutual fund rating. Do your homework and base your buying decision on:
1. The mutual fund's fit with your financial objective
2. The historical returns of the mutual fund
3. Measures of the mutual fund's volatility such as bear market rank
4. Mutual fund fees such as load, management fees, and expense ratios
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Related Resources
Business Week: Mutual Fund Rating
About.com: Mutual Fund Rating
Morningstar.com: Mutual Fund Rating
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Mutual Fund Rankings
Mutual Funds List
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