Investments & Financial Planning
What is the difference between the 2 rating numbers in a Mutual fund rating listing ?
Mutual funds are usually listed with ratings numbers such as 3/4. A rating of 5 = superior and a rating of 1 = poor. The ratings are calculated by Morningstar Inc. The first rating is based on the grouping of funds into four broad groups. The four groups are domestic stock funds, international stock funds, taxable bond funds and municipal bond funds. The second rating compares funds within a single type of similar funds. The ratings are grouped so that 35% of funds get a 3 while just 10% each get ratings 1 or 5. Note that the ratings illustrate past performance and not future forecasts.
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