What a fund star rating tells you

John Stepek explains the ins and outs of fund star ratings, and why investors cannot always rely on them.

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This Morning Star might be a better guide to top funds
(Image credit: 2014 Getty Images)

Fund ratings are big business. There are thousands of funds out there to a new investor, a star rating from an expert researcher may look like a way to narrow the field; and to an adviser, they provide a nice easy way to justify a recommendation. Unfortunately, one thing they won't do is uncover tomorrow's world-beating managers.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.