how a weighted average credit rating is tabulated varies throughout the financial industry in general the weighted average credit rating takes into consideration the proportion of the value of each credit rating and considers it as a percentage of the total portfolio with individual rating weights the fund can determine the average credit rating 
with a weighted average credit rating investors can uncover the true credit quality of a bond fund special considerationsthe weighted average credit rating is not the only statistic that investors have access to when understanding the credit quality of a fund statistical reporting companies may also integrate a linear factor into weighted average credit rating calculations similar in concept to standard weighted average calculations this methodology identifies the proportional weight of the value of each rating level with linear factor calculations a linear factor is assigned to each rating level based on the rating default probability an average linear factor is determined by the proportional credit ratings of the bonds in the portfolio the weighted average credit rating is then determined by its corresponding linear factor criticism of weighted average credit ratingsthis type of rating is not without controversy the weighted average credit rating process has been disputed in the bond fund industry as a result of the potential for investor confusion a weighted average rating methodology can take into consideration all of the potential rating classifications a fund can invest in therefore the fund may not hold any bonds in the specified weighted average rating category and this can result in confusion by those who see the tabulated figures example of a weighted average credit rating wacr a bond with 25 of its value in aaa 25 in bbb and 50 in ccc could have an average credit rating of b which is between bbb and ccc this may not necessarily provide a good representation to investors since the fund does not hold any b bonds for this reason most bond funds choose to provide a scale with weightings by credit rating in their marketing materials this helps investors to understand the concentration of bonds by rating and not just look to the results of the weighted average credit rating the vanguard long term corporate bond etf is a large bond fund with more than 6 billion in assets the fund does not provide a weighted average credit rating in its marketing materials or fund reporting instead it includes the following scale which shows its credit quality dispersion as of december 31 2020 1 source vanguard 1 