Mutual Decision has launched a mutual fund rating system based on predictive and academic models that forecast a fund’s future performance.
Mutual Decision has launched a mutual fund rating system based on predictive and academic models that forecast a fund’s future performance.
It aims to offer investors and financial advisers an alternative to existing methods that rate mutual funds based on their past performance.
The system, called Fund Grade, grades over 3,600 US equity funds using a proprietary formula that factors results from four academic models: return gap, active share, judging fund managers and forecasting alphas. Each model focuses on one or more unique variables that researchers found to be statistically significant in predicting fund performance, using a minimum of 20 years performance data going back to 1983.
"Every mutual fund prospectus cautions that ‘past performance is not an indication of future returns,’ yet this is precisely the principle investors are forced to rely upon when using today’s fund rating systems," says William G. Byrnes, founder and chief executive officer at Mutual Decision. " Mutual Decision was founded to help mutual fund investors earn superior returns, and our Fund Grade rating system – based on predictive models thoroughly vetted and supported by leading mutual fund academics – delivers on this mission."
With Fund Grade, Mutual Decision assigns mutual funds one of ten letter grades, with each grade including ten per cent of screened funds. There is an additional letter grade of A+ assigned to a select handful of top mutual funds that rank in the highest ten per cent across all four academic models.
Fund Finder, a screening tool, allows investors to select criteria (big cap, small cap, expense ratio, manager tenure, etc.) for viewing a fund’s rating, including the ability to screen by fund grade.
The rating system is available for free during a two week trial period for those who sign up, after which site visitors will be able to access all hosted academic models and site tools through a monthly (USD9.95), quarterly (USD23.85) or annual (USD71.40) subscription.
