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How reliable are mutual fund ratings

Updated : March 23, 2019 12:05 PM IST

The probability that a randomly selected five-star fund will outperform a randomly selected four-star fund is only 50.6 percent: study
If ratings do not predict future returns, and rating agencies universally disclaim that ratings are not predictive, then how did they come to be so important in the Mutual Fund ecosystem?
The answer lies in human psychology. No one ever fired an advisor or a broker for recommending a 5-star fund.
How reliable are mutual fund ratings

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