More on Fund Ratings

Morningstar is very well known for its mutual fund ratings, which many investors use regularly. Perhaps because of this popularity, other companies have opted to provide ratings.

Investors can go to numerous Web sites of companies other than Morningstar and find the current Morningstar rating. For example, try www.quicken.com.

As noted in an earlier chapter, Value Line provides coverage of mutual funds and uses a ranking system from one to five, where one is best.

Lipper, Inc. has been supplying data on mutual funds for some time, but mostly to institutional clients . It also provides substantial historical data. In September 2001 Lipper announced that it also planned to rate mutual funds, beginning in October 2001.

The Lipper ratings are based on three-year records. One rating shows those funds offering the most consistent returns of a superior nature when compared to the fund's peer group. A second rating focuses on the fund's ability to preserve capital. Lipper plans to show monthly the so-called "Lipper Leaders," consisting of the top 20 percent of funds in each group .