Score Weighting: (FLMSX)
Here are the factors and weightings on how we come up with the score
- Short-term performance beats category average: 10%
- Mid-term performance beats category average: 15%
- Long-term performance beats category average: 15%
- Morningstar rating: 10%
- Ratio of number of positive-return years over number of negative-return years: 15%
- Expense ratio is smaller than its category peers: 10%
- Performance vs volatility (ie. Sharper, Treynor, Standard Deviation) beats category peers: 10%
- Relative safety beats category peers: 15%
Score Grade: (FLMSX)
How we convert Fund Mojo Score to a letter grade
- Mojo Master: Fund Mojo score is greater than 0.85
- A+: Fund Mojo score is greater than 0.8
- A: Fund Mojo score is between 0.7 - 0.8
- B: Fund Mojo score is between 0.6 - 0.7
- C: Fund Mojo score is between 0.5 - 0.6
- D: Fund Mojo score is between 0.4 - 0.5
- E: Fund Mojo score less than 0.4
Score Design Philosophy: (FLMSX)
Our thinking behind the weighting factors
- Performance needs to be accomplished by the same fund manager on a consistent basis. We give great credit to a fund manager who can outperform its category peer on a consistent basis over many years. If the performance is not generated by the fund manager (ie. recent manager changes), then it is hard to predict whether a fund will continuously perform well in the future.
- Performance needs to accomplished under reasonable volatility. Some funds have great returns on average over years, but the magnitude of up-and-down is significant that they are not suitable for investors to tolerate. Top funds on our list have great Sharpe ratio and up-year vs down-year track record.
- Expense should be in-line with the category. We realize that great managers do not come cheap and small funds need to charge a higher fee to survive, so we added some buffer for these managers, but it is important for investors not to pay super-premium for a fund.
- Safety. While there are great upside to be accomplished, top investors stay in the game because they don't lose money over difficult time. We put weight on a fund's ability to survive bear market and not to lose a lot of money over a 3 year downturn.