Mutual Funds

Mutual Fund Ranking

Funds are ranked based upon their performance as a whole and performance against their peers by such companies as MorningStar which has an industry recognized rating system for mutual funds. They have a one-to-five star system in which five stars is the best. Usually the higher the rank, the higher the quality of the fund. For example MorningStar rates mutual funds from 1 to 5 stars based on how well they've performed (after adjusting for risk and accounting for sales charges) in comparison to similar funds. Within each MorningStar Category, the top 10% of funds receive 5 stars and the bottom 10% receive 1 star. Funds are rated for up to three time periods-three-, five- and 10- years and these ratings are combined to produce an overall rating. Funds with less than three years of history are not rated. Ratings are objective, based entirely on a mathematical evaluation of past performance. The ratings are a useful tool for identifying funds worthy of further research, but should not be considered signals to buy or sell.