Mutual Fund Ratings

The has created and uses a model that analyzes each fund’s historical performance relative to various economic and financial statistics, such as corporate earnings by sector, the interest rate curve, and the performance of various stock indexes. Then based on our forecast for the economy and financial markets, we select funds for our model portfolios that we anticipate will perform the best in those forecasted economic scenarios. This approach is a hybrid between a forecasting model and a fund screener, as described in our Investor Library. In our experience, this keeps us from chasing yesterday's top performers and helps us identify tomorrow's top performers.

Although we have created some pretty complex models to help us in our fund selection decision-making process, we run our models and make the results available to our members, as a simple index score. For each mutual fund that we evaluate, we rank each mutual fund, within each of the fund family and fund category combination, on a scale of 0 to 100. We call this the Mutual Fund Alliance Index, or "MFA Index" for short. For example, if a mutual fund has an MFA Index Value of 50, then the MFA Index models anticipates that that fund will out-perform 50% of the funds in its fund family peer group. Therefore, clearly, the objective is to create a portfolio of mutual funds comprised of the highest MFA Index rated fund within each fund family / fund category, within the parameters of your investment objectives.

Typically, we run these models on a weekly basis, at the end of each week. Nonetheless, we typically only update rankings on on the last day of each month. The reason that we only change the rankings on a monthly basis is because the methodology underlying these models analyzes the underlying market fundamentals and fund fundamentals. And therefore, since the fundamentals rarely experience dramatic change, likewise, we do not expect the MFA Index to experience dramatic changes. Nonetheless, if there are dramatic swings in the market, or significant changes in the market and economy's underlying fundamentals, we do post intra-month updates to the MFA Index for the Fidelity and Vanguard funds that we follow.

In addition, you can always use the data we provide and calibrate our recommendations relative to your own assessment of the market. For each mutual fund we evaluate, we provide:

To start analyzing the funds and using the MFA Index, choose a fund category to the right:

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