Does the Star Rating for Funds Predict Future Performance?
We found the star rating was moderately predictive of future returns.
Does the Morningstar Rating for funds, more commonly known as the star rating, predict future performance?
Before we tackle that question, let's briefly review: The star rating is a backward-looking, quantitative measure of a fund’s past performance compared with its category peers. We’ve long stated that the star rating can be a good starting point for research for a few reasons: