Star ratings are calculated at the end of every month. You can search for a fund to see its most recent star rating for free on Morningstar.com.
Morningstar is a respected and reliable source of independent investment analysis for all levels of fund and stock investors, ranging from inexperienced beginners to sophisticated experts. ... Its website includes free information on individual funds and stocks.
Is Morningstar Premium worth the money? For long-term investors who want additional data and analysis on their investments, Morningstar offers an excellent value. If you pay for three years upfront, the annual cost comes out to about $150 per year.
The Bottom Line. Zacks and Morningstar both offer investors powerful tools for investment research and analysis, and both offer free and paid member services. However, Zacks may be best for advanced investors who trade stocks, and Morningstar may be best for investors who buy and sell mutual funds and ETFs.
The Star System
It ranks funds based on their past performance, with five stars meaning that a fund has historically posted the largest returns. These ratings are updated at the end of every month.
The Morningstar Rating is a measure of a fund's risk-adjusted return, relative to similar funds. Funds are rated from 1 to 5 stars, with the best performers receiving 5 stars and the worst performers receiving a single star.
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Morningstar acknowledges its rating system is a quantitative measure of a fund's past performance that is not intended to accurately predict future performance. Instead, the company recommends investors use the rating system to evaluate a fund's track record compared to its peers.
In fact, purchasing stocks with Zacks #1 rating (and rebalancing weekly) has been shown to outperform the market in 20 of the last 22 years, including down markets (verified by a independent company).
Morningstar offers two different membership packages. The basic package is free and only requires users to register through its website. Basic membership includes financial data access, the ability to connect your portfolio to Morningstar research, in addition to access to its article archive and their forums.
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The further the market price is below the fair value, the higher the star rating. A 5-star rating means the stock is trading meaningfully below fair value. Morningstar's rating system also factors in an uncertainty adjustment (known as the Fair Value Uncertainty rating).
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