Rating Systems at Morningstar

How well does this rating system work and should you pay attention to it? With the exception of index funds where the rating is meaningless, rating a fund based on its past performance is just looking in the rearview mirror.

Morningstar’s top-rated 5 star funds in 1991, 1992, and 1993 fell behind the general market for the next 8 years by an average 3%. They couldn’t even match the performance of the S&P 500.

Morningstar is currently revising their rating system to improve its usefulness.

Another company, Lipper Inc, has provided mutual fund analysis to institutions since 1971. They give investors a good alternative way of rating funds. Lipper, mindful of investor’s interest in capital preservation, ranks funds with a downside-only view of performance risk. Funds rated with a “one” have the least chance of losing money.

Lipper’s web site at www.lipperleaders.com also measures a fund’s after-tax return, fees and expenses, and total return.

Other Stock Market Basics Topics:

1. Mutual Fund Advantages
2. History of Mutual Funds
3. NAV
4. Dollar Cost Averaging
5. General advice about choosing a fund
6. Mutual Fund Ratings
7. Evaluating Mutual Fund Investment Risk
8. Mutual Fund Share Classes
9. Mutual Fund Fees
10. The Mutual Fund Prospectus
11. How important is the manager's length of experience?
12. Why is the prospectus hard to understand?
13. Mutual Fund Annual Report
14. Comparing your fund to the competition
15. Comparing funds on an after-tax basis
16. Average Return on Investment
17. How Not to Pick a Mutual Fund
18. Cashing in Your Fund
19. When to Sell Your Fund
20. Mutual Funds and Asset Allocation
21. When to get started with a mutual fund
22. Types of Mutual Funds
23. Value Stock Funds
24. Growth Stock Funds
25. Small and Micro-cap Stocks
26. Mid Cap
27. Large Cap Companies
28. Income Stock Funds
29. Mutual Fund Index
30. Enhanced Index Funds
31. Sector Mutual Funds
32. Stock Market Sectors
33. Defensive Stocks
34. International Funds
35. Real Estate Mutual Funds
36. Socially Responsible Funds
37. Balanced Funds
38. Tax-Efficient Funds
39. Bond Convertible Funds
40. Junk Bond Funds
41. Mixtures of stock types
42. Closed End Funds
43. Exchange Traded Funds (ETF’s)
44. Stock Picking Strategy - Picking your own stocks?
45. Fund names, and what they really invest in
46. How to get started
47. Where can I start investing with no money?
    

				Did you find the information you were looking for?
				After reading the above article, what is still your biggest question? Get Weekly Investing Advice Receive free practical investment advice and tips delivered weekly to your email box with contributions from financial planners, investors, and financing and loan professionals.   I want to ask a question and receive investment tips.   I only want to ask a question and don't want helpful advice. E-Mail Address:   Your Name:

To find more investing and stock related websites input the phrase "investing advice" directly into the search box below or simply type in your own search phrase to see over 1 million other investing, stocks and online trading websites.