Morning Star is a leading investment research firm that provides independent research and analysis on stocks, bonds, and other investment vehicles. The Morningstar Rating is a proprietary rating system that measures the historical performance of mutual funds and other investment products. It's important to note that past performance is not indicative of future results, and the Morningstar Rating is just one tool among many that investors can use to evaluate investments.

Here's how the Morningstar Rating works:


1. Risk-Adjusted Return: The primary factor in the Morningstar Rating is a fund's risk-adjusted return, which takes into account both the total return of the fund and the level of risk it assumes.

2. Peer Group Comparison: Funds are compared to their peers within their respective Morningstar Categories to determine their relative performance.

3. Star Ratings: The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the following 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.

4. Time Periods: The Morningstar Rating is based on three-, five-, and 10-year performance metrics, with the 10-year period being the most heavily weighted.

5. Independent and Objective: Morningstar's analysts strive to maintain an independent and objective perspective when assigning ratings.

The Morningstar Rating is a useful tool for investors to quickly gauge the relative performance of funds within a category, but it should not be the sole basis for investment decisions.

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The Morningstar risk rating is a ranking given to publicly traded mutual funds and exchange-traded funds (ETF)s by the investment research firm Morningstar. The ratings range from one to five stars, with one being the poorest rank and five being the best.read more >>