To start, let Morningstar do some work for you. Morningstar rates funds from one to five stars, with five being best. The star rating compares a fund's past returns to its volatility. The scoring is done by fund category. For instance, the China funds are compared to other funds focusing on Asia (excluding funds specializing in Japan).
Within that category, funds with the highest ratios of returns versus volatility get the highest scores, and those with the lowest ratios get the lowest scores.
Morningstar's star ratings aren't perfect, but they work for a first look. If I don't eliminate low-rated funds at the beginning, they usually flunk out anyway when I analyze them in detail. Normally I focus on four- and five-star funds. But China's market and most of these funds' returns were in the dumps from the late 1990s through 2002, and there are no China funds with five-star ratings. So I relaxed my standards and included three-star funds.
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