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Ads by GoogleSection IndexWhat are mutual funds? History of mutual funds How mutual funds earn money Professional management Mutual funds ranking Mutual fund share classes Mutual fund prospectus Mutual fund annual report Mutual funds vs. other investments Advantages of mutual funds Disadvantages of mutual funds Types of mutual funds Load vs. no-load funds Mutual fund fees Distribution of capital gains and dividends Mutual fund taxation Recent scandals |
Mutual FundsMutual Fund RankingFunds 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.
This is general information only and is not investment advice.
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