Understanding Morningstar’s ETF Ratings

Learn how to use the Star Ratings to make better investment decisions

Esther Pak 24 February, 2012 | 2:47PM Alanna Petroff

Morningstar’s Star Ratings for ETFs and funds offer investors a convenient way to size up an ETF’s past performance and key characteristics to help them understand how suitable the investment may be in their portfolio.

Star Rating
The Star Rating is a proprietary Morningstar system that uses quantitative data to assign funds and ETFs with stars. 

ETFs can get up to five stars based on how well they have performed in the past compared to similar funds and ETFs. The more stars assigned to an ETF, the better the ETF’s past performance. In addition to performance, the rating system also takes risk, volatility and sales charges into account. The ratings are completely objective, based entirely on a mathematical evaluation of past performance.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Esther Pak  is an assistant site editor of Morningstar.com.

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