2015 Conference
October 15–16, 2015
Orlando, FL
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Assessing Performance of Morningstar’s Star Rating System for Stocks
Keywords: 5 words maximum
investments ratings portfolio performance
Very short description for use in the program to help attendees understand more than a title can describe
Investors have a vast array of advisory and ratings services to assist them with security selection. One of the most prominent sources of stock ratings is Morningstar. For a modest fee, investors can access Morningstar‘s Star ratings for individual stocks. We evaluate the performance of portfolios formed using this rating system. During the 11 years of our analysis, we find that 5-star stocks provide an annual return of 13.66% versus 8.44% for 1-star stocks. We also find considerable variance in these portfolios‘ exposure to risk and style factors over time.
Lead & Corresponding Author
Paul Bolster, Northeastern University
Job Title
Professor of Finance
Additional Authors
Emery Trahan, Northeastern University
Job Title
Senior Associate Dean
Pinshuo Wang, Northeastern University
Job Title
PhD Candidate