A Method To Test The Quality Of Open Stock Fund Rating

With developing of fund credit rating, investors are taking more and more attentions in the rating grades. The results of fund rating agencies have become an important factor when investors are making decisions. In fact, rating agencies must keep independent and cannot do any business with investors and security issuers.However, rating agencies may collude to offer inflated ratings. Moreover, fund managers need a higher grade for inducing more money. Rating agencies have incentive to collude with issuers which leads inflated ratings. This situation will result in investors many uncorrected investment actions and damage the interests of investors.In order to revealing the phenomenon, this paper takes clustering as a testing standard, and puts out a new quality testing method about open-stock fund rating results. By choosing8rating quality indexes and using K-Means algorithm to cluster the result of fund rating, we test its quality of validity and forecasting.Furthermore, the paper defines’the average absolute error rate’ and rating accuracy rate to analyze the rating results of5popular fund rating systems. By using rating effectiveness and stability test, the result is Ji An Jin Xin stays strong rating, rating better, followed by Morningstar, Tian Xiang Investment Consulting, Galaxy Securities, Shang Hai Securities last.