Morningstar Fund is rated for open-end funds with performance data of not less than one year, in which money market funds and capital preservation funds do not participate. The rating is updated monthly, and there are one-year, two-year and three-year ratings at this stage.

Specific to the types of funds, Morningstar is divided into five types: stock funds, bond funds, allocation funds, money market funds and principal guaranteed fund, ranking them respectively.

Among similar funds, each fund is divided into five stars according to the risk-adjusted MRAR. Morningstar star rating is a quantitative evaluation based on the past performance of funds, which aims to provide investors with a tool to simplify the process of selecting funds. It is the starting point for further research on funds and should not be regarded as a suggestion for buying and selling funds.

Judging from the ranking index, Morningstar is measured by three major items: income evaluation index, risk evaluation index and risk-adjusted income index.

First, the income evaluation index. Morningstar uses the total rate of return, which is relatively simple;

Second, risk assessment indicators. Morningstar adopts standard deviation and risk coefficient of Morningstar;

Third, the risk-adjusted return index. Morningstar adopts Sharp ratio, and the higher the standard score of risk-adjusted income, the better the overall performance of the fund.

Therefore, funds with high Morningstar rating not only have high returns, but also have good risk control, that is, the fluctuation of fund returns, especially downward fluctuations, is small. Can be used as a reference.