There are many authoritative rating agencies, such as Morningstar, Haitong and Galaxy. Their criteria for rating funds are similar. Let's take the morning star as an example to find out.
First of all, all funds are classified according to standards. According to the different types of assets, domestic open-end funds are divided into seven categories: stock type, active allocation type, conservative allocation type, ordinary bond type, short-term debt fund, money fund and capital preservation fund, among which the proportion of stock investment in net asset value is ≥70%? Some belong to stock funds, and those with a bond ratio of ≥70% belong to bond funds. If there is a ratio between the two, it belongs to active allocation, conservative allocation and other allocation funds.
Then comprehensively consider the performance and risk of the fund, and sort the funds. Here, the risk-adjusted performance is considered.
Next, similar funds are sorted by performance. The former 10% is five-star, 10% is four-star, some are three-stars, some are two-stars, and finally 10% is a one-star fund. Funds established less than one year do not participate in the rating.
It can be seen that the rating of the fund is not an absolute standard. It is possible that the performance of the two funds is similar, but because of the limited number of places, there is a difference of one star.
Fund rating can be used as a reference for us to choose funds, but it is not the only criterion.
There are three-year ratings and five-year ratings in the rating standards, and some excellent new funds naturally miss the rating list. If you only rely on ratings, you may miss many good new funds.
Fund rating is based on historical performance, with the purpose of simplifying the process of investors' fund selection, and then making further screening on this basis. A highly rated fund does not mean that it will continue to achieve excellent performance in the future.