Summary of Gauging Risk and Return Together: The Morningstar Rating

Rather than buying funds based on their Morningstar Rating™ for funds, investors should first decide on an overall portfolio strategy and then seek the best funds for each portion of their portfolios using a variety of tools. The Morningstar Rating for funds is a good first screen. It is a quantitative achievement test that shows what a fund has done in the past. But it can’t always reflect to the fund’s current state of affairs. That’s where the Morningstar Medalist Rating™ comes in. Think of it as an aptitude test. It is a forward-looking, qualitative rating assigned by Morningstar’s 100+ fund analysts. It takes into account many factors that the purely quantitative Morningstar Rating for funds cannot.