Did you read Morningstar's disclaimer?
"Ratings are objective, based entirely on a mathematical evaluation of past performance. They're a useful tool for identifying funds worthy of further research, but shouldn't be considered buy or sell signals."
Star ratings should not be considered predictive. There is a Vanguard research paper on the topic, link below, that gives a better explanation than anyone is going to type.
I would say they are NOT reliable. The typical analyst at Morningstar is in his or her mid-to-late 20s, and is probably paid around $60,000-$90,000 salary to assess his or her basket of securities. If they could accurately predict how well (or how poorly) a fund would perform in the future, that same analyst would be making MILLIONS of dollars running a private equity firm or hedge fund somewhere rather than slaving away at Morningstar.
how reliable are Morningstar Investment ratings? Are 5 stars worth pursuing ? Anyone have a track record on Mormingstar 5 star stoocks relative to performance?
