What value do Morningstar Ratings offer to investors?
There are now more than 5,000 mutual funds available to investors in the Canadian market. Morningstar Ratings offer investors a quick and easy way to identify funds that have produced strong risk-adjusted performance relative to their peers. Morningstar’s Ratings are completely objective and unbiased. How should investors use Star Ratings? Star Ratings tell how a fund has performed on a risk-adjusted basis relative to a relevant category in the past. That is a useful piece of information, but it’s far from all you need to know to make a smart investment decision. The ratings offer an introduction, not a conclusion to evaluating a fund. How can I use Star Ratings to construct a portfolio? An optimal portfolio will not necessarily feature only four and five star funds. An investor needs to consider other factors such as risk tolerance, how the various funds in the portfolio may work together and appropriate diversification across asset classes. It may be that a particular fund, which cur
