At Morningstar, we have two ratings.
One is the Star Rating, which assigns 1 to 5 stars based on a fund's past risk- and load-adjusted returns versus category peers. This is a backward-looking rating.
The Analyst Rating is the summary expression of Morningstar's forward-looking analysis of a fund. It is based on the analyst's conviction in the fund's ability to outperform its peer group and/or relevant benchmark on a risk-adjusted basis over the long term.
If a fund receives a positive rating of Gold, Silver, or Bronze, it means Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years. To understand these ratings in more detail, read How the fund analyst rating is arrived at.
Out of the 30 equity funds which are rated Gold, Silver or Bronze – only 7 have underperformed their respective indices. This shows a success rate of almost 80% in terms of recommendations.
Worth noting though is that the degree of outperformance varies across the 22 funds.
- To arrive at this calculation, the month-end closing NAV and index value for the month in which the rating was issued and the NAV and index value as of May 19, 2014 was considered.
- The returns and degree of outperformance/underperformance are absolute and since rating.
- All figures are in percentage terms.
