MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Monday, December 3, 2012 A Trade Pub Disses Mutual Fund Ratings Performance-based ratings like the Morningstar star system have a lousy track record predicting future investing success, according to guest writer Gordon Tewell in P & I. Unfortunately, Tewell writes, these rating systems tend to be imperfect when it comes to predicting future performance. The basis of most rating systems is some combination of past performance — typically over three-, five- or 10-years — and a measure of the fund's risk. The problem with using purely quantitative rating systems is that the information used for each manager is historical. Moreover, according to Tewell, these ratings often fail over market cycles and top-quartile mutual funds often lag benchmarks. To read more of Tewell's critique of the philosophy of past performance, turn to P&I. Printed from: MFWire.com/story.asp?s=42220 Copyright 2012, InvestmentWires, Inc. All Rights Reserved |