top rated mutual fundsTop rated mutual funds are ranked by the agencies that rank and sort these funds.These ranking companies include Morningstar and Lipper Inc. The rankings given by these institutions are based on several variables, and summarized in the overall rank given by the agency. For Morningstar, funds are calculated a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. For Morningstar, the top 10 percent of funds in a category receive five stars, the next 22.5 percent receive four stars, and the next 35 percent receive three stars, the next 22.5 percent receive two stars and the bottom 10 percent receive one star. Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages. These Morningstar ratings on U.S. funds reflect historical risk-adjusted performance, and are subject to change every month. They are derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Finding Top Rated Mutual FundsFor Morningstar, you can find the best ranked mutual funds from the variety of over 2,000 available funds (2022 to be exact the last time I checked) by going to the web site at morningstar.com, looking up the "Funds" section, and choosing the "All 2,000 Mutual Funds" link under the Analyst Research section. From there, you can sort the funds based on star rating, YTD return, and category, among others. Funds ratings, which may include the Morningstar and Lipper ratings, can also be found from other sources with financial information. These sources include:
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