How to Rate a Mutual Fund: Personalizing the Star System

by John Markese

How To Rate A Mutual Fund: Personalizing The Star System Splash image

Toss the stars, chuck the checkmarks, cast aside the letter grades, and ignore any other mutual fund ratings that come down to an all-in-one rank.

Why?

For one, you can’t really understand a fund, your investment, by staring at a checkmark or by gazing at the stars.

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John Markese is the former president of AAII.


Discussion

J Morlock from New Jersey posted about 1 year ago:

Once additional criteria I look for is whether the fund manger is invested in the fund. I prefer funds whose mangers have their own money invested in the fund.


Kenneth Hancock from New York posted about 1 year ago:

cut the universe by:
Expense ratio level, minimum manager tenure,load level and category rank.
Then use a three legged stool approach:
Performance: return level over at least 5 years
Risk: Use standard deviation and other risk criteria.
Management: Expense ratio,turnover, Manager tenure and analyst ratings.
Allocate 33% of the score to each leg to identify the strongest funds in each category.

This works for me !


Jockular Ford from New York posted about 1 year ago:

How has the aaii mutual fund portfolio done


Steve Daniels from Connecticut posted about 1 year ago:

good article but not enough focus on the importance of Management tenure and how rigidly the fund adheres to its classification. Too often a fund strays from its intended classification.


Ron from Georgia posted about 1 year ago:

The AAII portfolio includes ETFs and had a 15.5% return: http://www.aaii.com/model-portfolios/fund. It has around 10 funds, mostly domestics (large, small, midcap), a REIT, EM, junk bonds, and an optional short term bond fund. There is no long term bond fund or gold/commodities.
I prefer an all ETF portfolio based on 3-month and 6-month risk-adjusted returns with no rebalancing, meaning put more money into funds that are going up and less into funds that are in decline.


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