The mutual-fund rankings were created using two Bloomberg functions. We used the Fund Screening (FSRC) function to generate separate lists of funds for global and U.S. equities and global and U.S. bonds.
All searches included only active, open-end, U.S.-domiciled funds with more than $250 million in total assets. We excluded institutional-class, index, sector and market-neutral funds. For global equity and global bond funds, we limited the universe to funds with at least one-third of their assets invested outside the U.S. For the U.S. bond ranking, we included only intermediate/long funds.
We used the Fund Scoring (FSCO) function to create a scoring model with five criteria: total returns for one, three and five years and Sharpe ratios for three and five years, all as of Feb. 17. Sharpe ratios were added because they show how well the return of a fund compensates investors for the risk taken. A fund that takes substantial risk to produce a high return may score a lower ratio than a fund that takes less risk and gets a lower return.
We gave equal weight to the five criteria. Each of the funds in our customized mutual-fund searches was ranked using this scoring model. The winning funds were those that received the highest scores.
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