March 2012 – Mutual Fund Rating Sites

By Junior Yearwood

With 6700 U.S.-registered mutual funds to choose from, the Holy Grail of sites is one that answers the simple question: which of these damned things is going to give me the information I need to make money without making me sick!  A bunch of sites promise answers.  Almost none of them deliver.  While we thought we’d need to wade through an embarrassment of riches, mostly we found a swamp.

After reviewing a dozen sites and doing a lot of digging, we’ve decided that three are worth your attention.  Our criteria were simple: the site had to have useful, accessible (which is to say, free) content and it had to have research to back up the validity of its ratings.  These three did.  For each of them, we’ll walk you through the site’s history and focus, identify its best features, and offer up a few cautionary words as well.  After that, we’ll give you the short summary of the other sites we reviewed and didn’t recommend.

Gold, Silver, Bronze


There’s no real secret about the #1 site.  Now the 800 pound gorilla of the industry, Morningstar started in Joe Mansueto’s apartment as a very modest operation that applied the style (but not the substance) of the Value Line rating system for stocks to mutual funds. With data on approximately 330,000 investment offerings, a wealth of free content, including many useful tools and screeners and a solid track record. They are the Gold Standard of commercial fund sites. Read the full profile.

Do you remember that Jerry Seinfeld joke? The one about the Olympics?  “I think I have a problem with that silver medal. Because when you think about it, you win the gold – you feel good . . .  But when you win that silver it’s like, ‘Congratulations, you almost won. Of all the losers you came in first of that group. You’re the number one loser. No one lost ahead of you!’”


It would be easy, but wrong, to dismiss Lipper as “the best loser around.” We have all heard the quote “XYZ beat their ten year Lipper average,” at the end of an ad for a mutual fund or related company. That quote might be meaningless marketing speak but there is no doubt that Lipper is synonymous with performance, and with good reason. Lipper is one of the most widely used and respected commercial fund sites online, and on average their top picks tend to outperform their peers.  The Lipper Leaders search tool is one of the most intuitive screeners out there, and throughout information is provided in a way that is clear and easy to understand.  Add in investment walkthrough for new or inexperienced investors and easily accessible FREE webcasts and videos and you have a site worth checking. Read the full profile.

Fund Reveal

The ancient Greek poet Archilochus once observed, “πόλλ’ οἶδ’ ἀλώπηξ, ἀλλ’ ἐχῖνος ἓν μέγα.” So true, so true. For those of you whose Greek is rusty, he says “the fox knows many things, but the hedgehog knows one big thing”. Fund Reveal plays hedgehog to Morningstar’s fox. Fund Reveal does only one thing, without adornment and with great focus. Fund Reveal studies the day-to-day volatility of every fund in existence, and has used that wealth of data to generate a simple model with a fair amount of predictive power. By looking simultaneously at average daily returns and standard deviations calculated daily, they believe they’ve identified factors which persistently predict fund performance. Their spartan website is devoted to two simple tools for playing with that data.. Read the full profile.

The Rest of the Story welcome to the bizarre world of 50-day parabolic time/price indicators.  BarCharts offers buy and sell signals on funds, based on 13 technical indicators.  The funds homepage has lists of high volatility and “hot” funds.

Fund Mojo: the site illustrates why the Observer remains non-commercial.  Ads for Vanguard, J C Penney, structured annuity settlements and a payday loan locator adorn the homepage.  Their goal is “to help you find the top 1% of mutual fund managers.”  You get a grade.  It’s based on your score.  The score is derived from eight, variously-weighted criteria (plus “We also apply various filters and calculations on each factor to ensure best representation of the fund performance”).  Why the score makes sense isn’t exactly explained.  They do have lots of lists.

MAX Funds: a nice little site, especially if you like speedometer-type gauges. They offer a glacially-slow fund screener which allows you to tap into both their proprietary ratings and more standard measures such as expense ratios.

S&P: run away!  Run away!  The site’s almost impossible to use, rates only fixed-income and bond funds, makes it hard to search for the ratings, and then makes inexplicable decisions about what to rate.  Their fund ratings, for example, list no Fidelity or PIMCO bond funds. common to many sites, TSC offers simple ratings (A+ for Sit Minnesota Tax Free Income – their “best fund for 2012”), lists of “best funds for 2012” and occasional articles (we only found one 2012 article) by Frank, Gregg and Stan.  Their “best” lists are easy to find, but no one says how the grades are derived (there’s the usual chatter about risk-adjusted returns, then the leap to “we believe this fund is among the most likely to deliver superior performance relative to risk in the future as well.”  There is, sadly, no evidence of that.

U.S. News: can you say “garbage in, garbage out”?  U.S. News takes the ratings from five other sites, assumes they’re all valid (they aren’t), permutes them in ways not intended by their creators, and then averages them.

Value Line: the Value Line website is mostly a sales catalog for its many products.  The mutual funds “research hub” has a handful of articles, none (other than “top returning funds” lists) less than six months old.  The Value Line mutual funds live on a separate website.

Zacks: like a late night infomercial that won’t go away, Zacks seeks to lure you into purchasing their premium package while never giving you enough of a reason to do so. They may be a widely used by media based companies, but their website does them a serious disservice. It almost feels like you would be buying cut rate car insurance when you know you need the full comprehensive package.