How does HedgeFollow rate funds?
From 0 to 5 stars, by how well each fund's top 20 stock holdings performed over the last three years, with penalties for volatility and drawdowns. Ratings are relative: 3+ stars means a fund beat 60% of rated funds, 4+ stars the top 20%.
To be rated, a fund generally needs three or more years of 13F filings, at least five stocks every quarter, and filings free of significant errors. Ratings cover every kind of institution, not just hedge funds.
A high rating takes a high cumulative return reached along a fairly steady path: two funds with the same return can get different ratings if one got there with much bigger swings.
HedgeFollow also ranks funds by their top 20 holdings' three-year return, weighted equally (stock picking) or by the manager's weights (stock picking and allocation).
Related pages: How we rank hedge funds, in full Top hedge funds