Unit trust fund rankings, ratings or other evaluations of fund performance can provide an important way for you to compare your fund's past performance with other funds.
Unfortunately, investors often interpret these rankings as recommendations, or even as projections for future performance, which they clearly are not.
Your best protection is being an informed investor. Request prospectus from the funds you are considering and read them carefully to understand their goals, risk factors, performance record and procedures for buying and selling shares.
Professional ranking services, financial magazines and investment newsletters are the most common sources for this information, but there are others and not all present the same information or use the same criteria for evaluating funds.
As an investor, you should be aware of how these reports differ and how this information can be used by you in making sound investment choices.
Rankings or ratings provide another piece of important information that can be used in the selection of fund investments, but they should not be used as the only basis for your decisions. You still need to do your homework on the funds you are considering.
Identify your goals and evaluate a fund's ability to meet your goals within your investment timeframe and at the level of risk you are able to accept.
All performance rankings and ratings show how a fund has performed in the past and is no guarantee that it will continue to do so. Rankings are a good barometer, however, for determining if a fund has been well-managed over the years, or if it has consistently performed in a particular manner.