What is the Morningstar Rating (star rating)?

The Morningstar Rating, also known as the star rating, is a measure used to evaluate the past risk-adjusted performance of mutual funds. Morningstar rates funds on a scale of one to five stars, with five stars being the highest rating. This rating system provides investors with a simple way to compare funds within the same category and gauge their historical performance. The rating takes into account factors like total returns, volatility, and expenses over a specific time frame. It helps investors identify funds that have consistently outperformed their peers and assists in making informed investment decisions. However, it is important to note that the star rating is solely based on historical data and may not predict future performance. Investors should consider multiple factors before making investment choices.