What is the Morningstar Rating (star rating)?

The Morningstar Rating, often referred to as the star rating, is a tool used by Morningstar to evaluate the risk-adjusted performance of mutual funds and exchange-traded funds over specific time periods. This rating is designed to help investors make informed decisions by comparing the historical performance of different investment vehicles. The rating is based on a scale of one to five stars, with five stars representing an exceptional performance in relation to a fund's peers. The star rating is calculated using a formula that takes into account the fund's past returns, its volatility, and the performance of similar funds in its category. It essentially provides an assessment of how well a fund has performed relative to its risk. It is important to note that the rating reflects historical performance and does not guarantee future results. Investors should consider the star rating as one of many factors when evaluating investment options. In addition to the star rating, Morningstar offers other metrics and analyses, such as analyst ratings, which provide further insights into investment choices. For more detailed information about individual funds or the rating system, investors may want to explore the current web page, which offers extensive resources and guidance related to Morningstar's evaluations.