What do morningstar categories mean

Ratings are objective, based entirely on a mathematical evaluation of past performance. The Morningstar Rating methodology rates funds within the same Morningstar category based on an enhanced Morningstar Risk-Adjusted Return measure.

Investments are rated for up to three time periods - 3, 5, and 10 years, and these ratings are combined to produce an overall rating. Investments with less than three years of history are not rated. Star ratings are calculated at the end of every month. The Morningstar Rating helps investors assess a fund's track record relative to its peers. It is a useful tool for identifying investments worthy of further research, but shouldn't be considered a recommendation to buy or sell an investment.

The Morningstar Analyst Rating provides an analyst's forward-looking assessment of a fund's ability to outperform its peer group or a relevant benchmark on a risk-adjusted basis over a full market cycle.

Gold: Best-of-breed funds and has garnered the analysts' highest level of conviction to outperform its peers within the same Morningstar Category. Silver: These sit just below Gold but are also amoung the strongest investments ideas within the same Morningstar Category. Bronze: The analysts do not expect these funds to perform as well as Gold or Silver rated funds but still expect them to outperform its peers within the same Morningstar Category.

Neutral: The analysts do not expect these funds to outperform their peers within the same Morningstar Category but also don't consider them likely to significantly underperform. Negative: The analysts do not expect these funds to outperform their peers within the same Morningstar Category and consider them to be an inferior offering to their peers.

Under Review: This designation means that a change at a rated fund requires further review to determine the impact on the rating. The Morningstar Analysts will visit the fund provider and meet people behind the scenes such as analysts and chief investment officers. They will evaluate the fund based on considerations such as the funds' costs and charges, advantages of the manager compared to their peers, the manager's process in managing the fund and the culture of the company.

Analyst Ratings are continuously monitored and re-evaluated at least every year. Investors can use the Analyst Rating to find funds that Morningstar analysts believe will perform better than similar investments over a full market cycle, though these shouldn't be considered buy or sell recommendations.

The Morningstar Sustainability Rating is a measure of environmental, social and governance ESG risks in a fund's underlying holdings compared to its peers. Your Privacy Rights. To change or withdraw your consent choices for Investopedia. At any time, you can update your settings through the "EU Privacy" link at the bottom of any page. These choices will be signaled globally to our partners and will not affect browsing data.

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Hence, it is important to use these ratings as a way to screen potential funds you could invest in. For more help, please do use our ClearInvest portal.

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