How to Rate a Mutual Fund: Personalizing the Star System

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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Another reason to jettison rating symbols is that they are all based on weighting systems that are unlikely to reflect your specific financial/investment profile: factors that are personal and unique, such as risk tolerance, investment horizon, financial goals, and tax situation.

Finally, the monolithic ranking icons may be overly seductive as investors embrace them as crystal balls when they are really more akin to rearview mirrors.

Personalized Ratings

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Mutual Funds
How to Rate a Mutual Fund: Personalizing the Star System
Mutual Funds: The funds that made it into AAII's Top Funds Guide are of investor interest and are readily available, with low expenses and no or low loads, above-average returns, and they have not "bought" their returns with mountainous risk.

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Treasuries have a number of features that make them extremely attractive to individual investors. And if you buy through Treasury Direct, you eliminate all commission costs as well as any cost for maintaining an account.

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Mutual Funds
How to Rate a Mutual Fund: Personalizing the Star System
The funds that made it into AAII's Top Funds Guide are of investor interest and are readily available, with low expenses and no or low loads, above-average returns, and they have not "bought" their returns with mountainous risk.

How to Rate a Mutual Fund: Personalizing the Star System

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April 2002 Issue