Introduction to Gauging Risk and Return Together: The Morningstar Rating

You may already know two common measures of risk-adjusted performance: alpha and the Sharpe ratio. But both of those figures need a context to be useful. Who can say whether an alpha of 0.7 is good? Or whether a Sharpe ratio of 1.3 is good?

That’s where Morningstar’s proprietary fund ratings—the Morningstar Rating™ (often called the star rating), and the Morningstar Medalist Rating™—come in. You can find a fund’s Morningstar Rating™ and Morningstar Medalist Rating™ within Morningstar’s fund reports.