The Morningstar risk rating, or simply Morningstar rating, is a ranking given to publicly traded mutual funds and exchange-traded funds (ETFs) by the investment research firm Morningstar. Risk is assessed across five levels designed to help investors quickly identify funds to consider for their portfolios. Funds receive ratings ranging from 1 to 5, with 1 given to the worst performers and 5 for the best. The ranking is based on variations in a fund’s monthly returns – with an emphasis on downside variations – as compared to similar funds.
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