http://www.fundlibrary.com/features/columns/page.asp?id=13725
The search for reliable risk ratings goes on. In the most recent effort, fund companies must now provide investors with a “Risk Rating,” which can be found in the fund’s prospectus and on the new point of sale documents (basically fact sheets funds must provide clients). Fund managers will rate the risk of their funds in five fairly general categories: Low; Low to Medium; Medium; Medium to High; or High. The goal of these ratings is very laudable – to give investors an idea of how much risk they will be accepting by investing in a particular product. But how reliable are they?