5 Don'ts When Using Star Ratings
Published On: 04-Jul-2017
5 Don'ts When Using Star Ratings
When hunting for a fund, star ratings are a great starting point. They provide a composite, visual measure of a fund’s historical risk-adjusted return compared to peers: in any particular category, funds clocking the top-10% risk-adjusted returns get a five-star rating, followed by the next 22.5%, 35%, 22.5% and 10%, respectively, from four to one stars.But they can also be misleading. Here are five don’ts to consider when checking out the 5-star rated funds.
01
Don’t treat it as a blind buy.
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Don’t ignore your portfolio.
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Don’t ignore the fund’s strategy.
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Don’t assume all 5-star rated funds are equal.
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