Morningstar monitors and analyzes various mutual fund performances and uses a one- to five-star rating, with five stars being the highest rating and one star being the lowest. Morningstar studies more than 1,400 mutual funds and compares them to similar funds to judge their performance.
In assigning their star performance rating, Morningstar adjusts for risk as well as sales charges. The mutual funds cover several segments and business sizes, ranging from large cap to small cap funds. Morningstar is a leading provider of independent investment research. The company is based in Chicago but has an international presence. Individual investors, financial advisors, asset managers, and retirement planners, can utilize their ratings.