All About Mutual Funds. (Pardon the dust! Thread currently being renovated!)

[A HERETIC I AM]

7. Their Star rankings are based on past performance. (edited)

And AGTHX has gotten beat up pretty bad over the last few years, primarily because of the rather conservative investment style they have traditionally stuck with. It's averaged just under 2% per year for the last 5 years.

(Edited a sentence out because it was not accurate)

BTW, and you may know this, CSP, Morningstar gives annual returns rankings for "Since Inception" (of the fund, meaning from the date it was launched) only on their advisor site. If you go to The American Funds website and look at the "Returns and Expenses" page for AGTHX, it shows "Fund Lifetime" returns. 13.29% average annual return net of fees. Launched December 1st, 1973.

Most fund family pages will give similar info for their funds, but not Morningstar on their public pages for some reason.

Many, MANY 5 star funds tank the next year! I remember looking at one in late 2006 - a MBS backed bond fund rated 5 stars at the time that just blew up in 2007 through '08. 14 months later it had 1 star!

Here's a link to their rating methodology page;

http://corporate.morningstar.com/US/documents/MethodologyDocuments/FactSheets/MorningstarRatingForFunds_FactSheet.pdf