Mutual Funds – Mutual Funds Investing - Investment Mutual Funds |
The goal of the Zacks Mutual Fund Rank is to finally help investors select funds that will outperform the market in the future. Yet the most popular fund rating systems to date have been focused on past performance. And as we all know “Past Performance is Not a Guarantee of Future Results”. Not surprisingly these other rating systems have not benefited investors.
It's time for a change. It's time for the Zacks Mutual Fund Rank
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.
Ranking System Basics
How Are Ratings Assigned to Each Fund?
Where to See Fund Rankings
Is Zacks Paid by Firms to Rank Their Funds?
| Ranking System Basics |  |
We have created a new ranking system that covers nearly 19,000 mutual funds. These funds are ranked on a scale from 1 to 5 with 1 being the best funds to own for the future and 5 being the worst.
| Mutual Fund Rank |
Raiting |
| 1 |
Strong Buy |
| 2 |
Buy |
| 3 |
Hold |
| 4 |
Sell |
| 5 |
Strong Sell |
Why did we use this scale? Two reasons
1)The Zacks Rank for stocks employs the same 1 to 5 rating system and we wanted continuity between them for the benefit of our customers.
2)The most popular fund rating systems give #5 ratings to their best funds and yet history shows that these systems don’t help investors pick better funds. So we don’t want to follow their path.
| How Are Ratings Assigned to Each Fund? | |
Every month we update the Zacks Mutual Fund Rankings based upon an exclusive process created by the Zacks Quantitative Research Department.
We have 2 different fund systems to create the best mutual fund ratings. One system is exclusively applied to US stock based mutual funds and the other is used for all other funds. See below for explanations of each.
US Based Stock 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.
Why is this a better process than mutual fund rankings based upon historical performance? Because the Zacks Rank has proven itself to be one of the best stock ratings systems ever invented. 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 why 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.
All Other 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 tops funds for each category are identified with a #1 Zacks Mutual Fund Rank.
Our tests to date show that it will help investors pick better funds. Overtime the Zacks Quantitative Research Department will review the success of the model and make any and all adjustments to wring out additional gains for investors.
| Where to See Fund Rankings | |
These rankings are part of our Zacks Premium service. Click here for a free trial to the Zacks Premium
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
- Find Similar Funds: Put in ticker of one of your funds and we will show you its peers with higher ratings.
- Fund Comparison Tool: Enter up to 5 mutual funds to compare key attributes
- Reviews of top rated funds along with their top stock holdings
- Much more
| Is Zacks Paid by Firms to Rank Their Funds? | |
No. Zacks receives no compensation in any way from the Mutual Funds companies. Our Mutual Fund Rank is completely independent and objective.
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