The goal of the Zacks Mutual Fund Rank is to help investors select funds that will outperform the market in the future. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance, but the likely future success of the fund.
Below you will find a list of topics to explain our fund ranking system. Just click any link to jump immediately to the answers. Or scroll down to view all topics.
The Zacks Mutual Fund ranking system covers nearly 19,000 mutual funds. These funds are ranked on a scale from one to five with one being the best funds to own for the future and five being the worst.
|Mutual Fund Rank||Rating|
We use this scale for two reasons:
1)The Zacks Rank for stocks employs the same one to five rating system and we wanted continuity between them for the benefit of our customers.
2)The most popular fund-rating systems give their best funds a rating of five, yet history shows these systems don't help investors pick better funds. So we don't want to follow their path.
Each month, we update the Zacks Mutual Fund Rank based on an exclusive process created by the Zacks Quantitative Research Department.
We have two different fund systems to create the best mutual fund ratings. One system is exclusively applied to U.S. stock-based mutual funds, and the other is used for all other funds. See below for explanations of each.
U.S. Stock-Based Mutual Fund Ranking System: The key to this ranking system is that we evaluate the average Zacks Rank for the stocks owned by the fund. We blend this with other criteria that our studies show are beneficial in finding funds that will outperform in the future. In general, the higher the average Zacks Rank for the stocks in the fund, then the higher the Zacks Mutual Fund Rank.
It’s important to keep in mind the proven performance of the Zacks Rank. Since 1986, this stock-rating system has nearly tripled the S&P 500 with an average gain of +26% per year. These returns cover a period from 1986-2011 and were examined and attested by Baker Tilly, an independent accounting firm. So if a fund manager is buying more highly rated Zacks Rank stocks, then it shows that the manager has the expertise to buy stocks with qualities proven to beat the market. This leads to increased likelihood the fund will outperform its peers in the future.
To long-time Zacks customers, you already know how the Zacks Rank helps pick superior stocks. And thus its application to mutual fund holdings makes perfect sense. If you are not familiar with the Zacks Rank for stocks, then learn more with free articles and video resources at our Zacks Rank Education Home.
Second Mutual Fund Ranking System: The Zacks Quantitative Research Department has isolated a number of key factors that will help find funds that will outperform. Each mutual fund category is measured independently by performance and quality ratings. The top funds for each category are identified with a #1 Zacks Mutual Fund Rank.
These rankings are part of our Zacks Premium service.
There are two main ways to access Zacks Mutual Fund Ranks:
1) Quote Pages: Just enter a mutual fund ticker symbol on Zacks.com quote search box. That will take you to the quote/profile page for the fund where you will clearly see the Zacks Mutual Fund Rank.
2) Mutual Fund Homepage: All Zacks Mutual Fund Rank resources can be found here including:
- Top Ranked Funds by Category Group
- Mutual Fund Screener
- Similar Fund Finder: Put in ticker of one of your funds and we will show you its peers with higher ratings.
- Fund Comparison Tool: Enter up to five mutual funds to compare key attributes
- Reviews of top rated funds along with their top stock holdings
- And more
No, Zacks receives no compensation in any way from the Mutual Funds companies. At the center of everything we do is a strong commitment to independent research. Similar to the Zacks Rank, we’re not influenced by Wall Street or some agenda to determine the ratings. Our Mutual Fund Rank is completely independent and objective.