Congratulations to T. Rowe Price (Stock Quote: TROW), condolences to Goldman Sachs (Stock Quote: GS). The two firms held the first and last positions in Morningstar Inc.’s new ranking of the 30 largest mutual fund companies.

T. Rowe received high marks for “stewardship,” or looking after investors’ interests, as well as for overall returns, the longevity of its fund managers and the amount managers invest in their own funds. Goldman was hurt by poor grades for performance, manager tenure and low investment levels.

The top five fund companies also included American Funds, Dodge & Cox, Vanguard and MFS. The bottom five was rounded out by Dimensional Fund Advisors, Principal Funds, RiverSource and ING Funds (Stock Quote: ING).

OK, but does this really mean anything? Savvy investors choose individual funds, not fund companies, right?

Yes, but investment choices often come down to a few close finalists. All else being equal, you might as well go with a firm that gets good grades in general. A firm that  keeps its managers for the long term and produces good returns overall is probably doing something right. That’s good to know if your manager leaves, retires or dies before you’re ready to cash out of the fund.

Morningstar’s rakings also serve as a good reminder of factors investors should consider aside from past performance, which, after all, is no guarantee of how a fund will do in the future. So what are the criteria Morningstar considers so revealing?

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First, Morningstar’s director of mutual fund research, Russel Kinnel, looked at each firm’s fund performance for the past three years. The calculations gave more weight to funds with more assets, so a small fund that did exceptionally well could not distort the picture by pulling up the average for the entire fund company.

In real life, an investor should also look at five- and 10-year performance, generally choosing funds that consistently beat most of their peers. Morningstar has that data under the “performance” tab for each fund.

Next, the study looked at “stewardship,” or how well a fund company makes investors’ interests a top priority. High fees hurt the stewardship grade, low fees help. A company that focuses on gathering assets to boost its earnings does not score as well as one that emphasizes sound investing. The stewardship grade improves if a fund’s directors have a lot of their own money invested in the fund.

The final point focuses on each funds’ managers. If managers tend to stick around for a long time and invest a lot of their own money in the fund, the firm will score better. At top-rated T. Rowe, for example, managers had an average of 6.46 years of tenure and invested nearly $220,000 in their own funds. At Goldman Sachs, tenure was 3.62 years and managers had only about $90,000 in their own funds.

In any given year, fund performance can be whipsawed by factors that have nothing to do with the manager’s skills. By looking at grades for stewardship and management tenure, an investor can see past the confusing performance data to get a better idea if a fund is a sound long-term bet.

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