Investments & Financial Planning

What do the Mutual fund ratings mean ?

Mutual funds are rated by past performance for the past 3 years as calculated by Morningstar Inc. The rating system in newspapers are represented by 2 numbers such as 4/3. Ratings range from 1-5, 1 = poor and 5 = superior. The first rating shows the funds performance against a broad group of funds. The second rating shows the funds performance against a narrower group of more similar funds. The ratings are adjusted for risk. Two funds might have the same 3 year return but may have different ratings based on the funds volatility.

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