Course 206:
Gauging Risk and Return Together, Part 2
In this course
1 Introduction
2 What Is the Star Rating?
3 Caveats

Our last session focused on two common measures of risk-adjusted performance: alpha and the Sharpe ratio. But as we pointed out, 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 rating, often called the star rating, comes in. Unlike alpha and the Sharpe ratio, the Morningstar Rating for Funds puts data into context, making it more intuitive. You can find a fund's Morningstar Rating on its Morningstar fund report.

Next: What Is the Star Rating? >>

Print Lesson |Feedback | Digg! digg it
Learn how to invest like a pro with Morningstar’s Investment Workbooks (John Wiley & Sons, 2004, 2005), available at online bookstores.
Copyright 2015 Morningstar, Inc. All rights reserved. Please read our Privacy Policy.
If you have questions or comments please contact Morningstar.