Our Ratings Explained

Dynamic Fund Ratings

Within FundExpert you will see that each fund has a rating, from 1 Star to 5 Star.  This “Dynamic Fund Rating” tells you if a fund should be bought. A 5 Star Dynamic Fund Rating should mean a high probability of extra growth*.  This is based on a form of momentum investing, which means buying an investment (in this case a fund) which is already performing well on the likelihood that it will continue to perform well. We call this process “Dynamic Fund Selection”. 

Any fund that is 4 Star or less we label as a “sell” with the option to “view alternatives”.  This shows you the best funds in that same sector.  We choose these alternatives by looking back over the last 6 months, analyzing all of the funds in the appropriate sector, and identifying the top performers (based on a number of factors) as 5 Star.

Remember, Dynamic Fund Selection means buying a fund which is already performing well, the idea being that it will continue to doing well.

Here is an overview of how our rating system provides extra growth. And here is the evidence sector by sector.

Vintage Fund Ratings

Not everybody likes to take such an active approach to investing as outlined above. Some people prefer to buy a fund and hold it for a longer period without having to worry about continually checking up on it.  With this in mind we created our Vintage Ratings. 

These identify the funds that consistently outperform their peers over the long term.  The selection of funds that manage to achieve this is small! 92% of funds aren't good enough to qualify as Vintage funds.

The Vintage Fund Ratings will be integrated into our site in due course.  Keep an eye out for updates.

Hidden Value

These are funds that we have researched for an extended period and, in our view, have the potential to offer investors compelling value whatever their Dynamic star rating.  A fund could be hidden value for a number of reasons.  For instance, the fund may:

  • expose investors to long term positive trends e.g. urbanisation, industrialisation or favourable demographics in a particular country
  • be a consistent above average performer, while not necessarily being the best performer vs. its peers on a Dynamic basis
  • offer consistent, above average performance while taking below average risk 
  • focus on what is cheap or...
  • it should be well positioned to exploit a bounce after sharp market falls

We will identify these as they come along.  Our suggestion is that these sorts of funds should not exceed 20-30% of a portfolio.  They are a bit too “seat of pants” compared to the systematic and objective Dynamic Fund Ratings.

*Growth not income

You may notice that our Dynamic and Vintage ratings for growth funds don't tally with our income fund selections.  Dynamic and Vintage Ratings indicate growth potential, and do not give any indication of a fund’s ability to provide income.  

Income investors should ignore the star ratings on FundExpert.  They are solely an indicator of capital growth potential based on momentum investing.  Do not be concerned if a fund you hold for income has a low star rating.  More on this here.

Why Should You Trust Dynamic Fund Ratings Above The Rest? 

  • Too many fund rating systems are based on bias and incentives from fund managers
  • In contrast, our fund ratings are completely independent
  • We provide years of robust evidence as to how (and why) they work
  • We have a single focus: boosting your investment returns

Dynamic Fund Ratings

   N/A No rating currently available
Poor  definitely better options Poor – definitely better options
Below average, definitely better options Below average, definitely better options
Fair, there are better options Fair, there are better options
Good, but might be better options Good, but might be better options
Excellent, hold Excellent, hold
   Hidden Value A fund identified by FundExpert based on our research (as above)