Need a quick-and-dirty opinion on a fund? Get familiar with mutual funds ratings. It’s important to know how a fund has performed before investing in it.
Now that we’ve covered how to buy and sell mutual funds, let’s talk about mutual fund ratings and how they’re calculated.
What are mutual fund ratings?
Mutual fund ratings assess how the fund has performed over a period of time. The ratings are obviously helpful and important to investors – they allow them to get a quick opinion on a fund within minutes. Rating agencies keep fund managers on their toes and provide a super valuable service to customers.
Mutual fund ratings providers help keep fund companies honest by providing reviews on mutual fund boards, looking at the backgrounds of portfolio managers, detailing whether a fund is remaining true to its investment style, etc.
How mutual fund ratings are calculated
These are the two biggest fund-rating systems:
The Morningstar Rating System
Morningstar uses a ranked system with stars as the rating standard. The system presents breakdowns for equity funds into 12 industry groups inside three primary economic sectors to compare weighting decisions.
The Lipper Rating System
Lipper provides mutual and hedge fund reviews as well as commentary and tools for analyzing data. Lipper services the institutional and asset management industry, but its mutual fund services are still provided in detail for retail investors of all levels. Lipper Leaders, the rating system, covers 80,000+ funds. It uses a numbered rating system from 1 to 5; based on consistency, capital preservation, peer performance and expense management, etc.
Disadvantage of Mutual Fund Ratings
It’s easy to fall into the “performance trap” by blindly chasing performance. Past mutual fund returns are really not a great indicator of future performance. It’s also important to be weary of the herd mentality that often comes with mutual fund investing.
During volatile market times, mutual funds managers are susceptible to any temptation to try to increase performance. They may also attempt to protect themselves against downside risk. Both of these factors can lead to rogue trading – or even fraud.
Selecting mutual funds and reading their ratings can be pretty overwhelming – we know. We’ve got you covered. Our Putting Your Money in the Market course will teach you everything you need to know about picking mutual funds.
We are experienced users of dozens of stock trading platforms. We stay up to date on these platforms' service offerings, subscription fees, trade commissions, and welcome bonuses. The brokerages listed below are for U.S.-based investors, and are ranked in order of overall value received after taking advantage of their sign-up and/or referral offers. $3 monthly 10k in assets Growth $3; + $9 Month Bronze $3; Silver $6; Gold $12 a monthThe Best U.S. Brokerages as of June 30, 2025
Ranking of Top U.S. Stock Brokerages Based on Fees, Features, and Sign-Up Bonuses
Rank
Brokerage
Fees
Features
Sign-Up Bonus
Read Our Review
1.
Robinhood
$0
✅ U.S. stocks, ETFs, options, and cryptos
✅ Now 23 million users
✅ Cash mgt account and credit card
Free stock up to $200 with new account, plus up to $1,500 more in free stock from referrals
Robinhood Review
2.
Moomoo
$0
✅ Free Level 2 Nasdaq quotes
✅ Access to U.S. and Hong Kong markets
✅ Educational tools60 free stocks with $5k deposit; or 25 free stocks with $2k deposit
Moomoo Review
3.
Interactive Brokers
$0
✅ Access 150+ global stock exchanges
✅ IBKR Lite & Pro tiers for all
✅ SmartRouting™ and deep analyticsRefer a Friend and Get $200
Interactive Brokers Review
4.
Robinhood Gold
$5
✅ 4% APY on cash
✅ 3% IRA match
✅ Level II data
✅ No interest on first $1,000 of margin Save with Annual Fee
Robinhood Gold Review
5.
M1 Finance
✅ Automated investing “Pies”
✅ Banking & low-interest loans
✅ No trading fees with scheduled trades$75-$500 Tiered Sign-up bonus
M1 Finance Review
6.
Webull
$0
✅ Extended-hours trading
✅ Great charts and screeners
✅ Commission-free options trading$10 and a 30-day complimentary subscription to Webull premium;
$200-$30,0000 Tiered Sign up bonusWebull Review
7.
Public
$0
✅ Fractional shares
✅ No payment for order flow model
✅ “Alpha” tool with earnings calls$100-$10,000 Tiered Cash Account Transfer Bonus
Public Review
8.
Composer
$32 a month
✅ Invest in automated strategies
✅ Build custom strategies easily
✅ IRAs$49 per successful referral with no limit on the number of referrals
Composer Review
9.
Stash
✅ Stock-Back® debit card rewards in fractional shares
✅ Auto-invest and budgeting tools
✅ Curated theme portfolios$5 when you invest $5
Stash Review
10.
Acorns
✅ Automated investing portfolios
✅ ESG curated portfolios
✅ Acorns Early Invest for Kids' AccountsGet a $20 bonus when you start saving & investing
Acorns Review
11.
Etoro
$0
✅ CopyTrading™ to follow top traders
✅ Trade U.S. stocks, ETFs, and crypto
✅ Trades with themed portfolios$10 Crypto Sign-Up Bonus
Etoro Review
12.
Cash App
$0
✅ U.S. stocks and bitcoin; $1 minimum
✅ Peer-to-peer payments
✅ Beginner-friendly financial ecosystemUp to $200 in free overdraft coverage and earn 4% on cash
Cash App Review
Fees, features, sign-up bonuses, and referral bonuses are accurate as of May 31, 2025. All information listed above is subject to change.