The Morningstar Rating for funds, often called the “star rating,” was launched in Asia in 2001 to provide investors a quick and easy way to identify funds that are worthy of further research. The Morningstar Rating rates funds from one to five stars, with five-star funds being the best performers within their relevant peer groups. Investors should note that the Morningstar Rating gauges how a fund has performed relative to similar offerings in the past and is not an indicator of future performance.
Category-based Ratings
Morningstar assigns the Morningstar Rating based on comparisons of funds within a specific Morningstar Category. This is guided by two general principles: Firstly, the relative star ratings of funds with similar investment strategies should be affected more by manager skill than by market circumstances or events that lie beyond the fund managers’ control. Secondly, peer groups should reflect the investment opportunities for investors; that is, funds within a particular rating group should be valid substitutes for one another in the construction of a diversified portfolio.
For the latest Morningstar Category Definitions for European/Asian and South African funds, please click here.
