Morningstar Rating Overall, 3 Year, 5 Year, 10 Year
The Morningstar Rating, commonly called the star rating, is a measure of a separate account's risk-adjusted return, relative to other separate accounts in the same Morningstar Category. Separate accounts are rated from 1 to 5 stars, with the best performers receiving 5 stars and the worst performers receiving 1 star. Separate accounts are rated for up to three periods (three, five, and 10 years), and ratings are recalculated each quarter. The Morningstar Rating for separate accounts uses an enhanced risk-adjusted return measure, which accounts for all variations in a separate account’s monthly performance, with more emphasis on downward variation. Separate accounts are ranked against others in the same category and stars are assigned as follows: the top 10% of separate accounts in a category earn 5 stars, the next 22.5% 4 stars, the middle 35% 3 stars, the next 22.5% 2 stars, and the bottom 10% 1 star.
Morningstar Category
The Morningstar Category identifies separate accounts based on their actual investment styles as measured by their underlying representative holdings (portfolio statistics and compositions).
Morningstar Return 3 Year, 5 Year, 10 Year
An assessment of a separate account's excess return over a risk-free rate (the return of the 90-day Treasury bill), after adjusting for all applicable fees, in comparison to similar separate accounts. In each Morningstar Category, the top 10% of separate accounts earn a High Morningstar Return, the next 22.5% Above Average, the middle 35% Average, the next 22.5% Below Average, and the bottom 10% Low. Morningstar Return is measured for up to three time periods (three-, five-, and 10-years). These separate measures are then weighted and averaged to produce an overall measure for the separate account. Separate accounts with less than three years of performance history are not rated.
Morningstar Risk 3 Year, 5 Year, 10 Year
An assessment of the variations in a separate account's monthly returns, with an emphasis on downside variations, in comparison to similar separate accounts. In each Morningstar Category, the 10% of separate accounts with the lowest measured risk are described as Low Risk, the next 22.5% Below Average, the middle 35% Average, the next 22.5% Above Average, and the top 10% High. Morningstar Risk is measured for up to three time periods (three-, five-, and 10-years). These separate measures are then weighted and averaged to produce an overall measure for the separate account. Separate accounts with less than three years of performance history are not rated.
Morningstar Rating for Separate Accounts Fact Sheet (PDF)