Glossary A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 1 | 3 | 4 | 5 Definitions by InvestorWords.com   What is...? Stars Ranking A graphical representation of the risk-return profile of a fund, calculated over three years. In 1952 Harry M Markowitz published a paper that is now regarded as the forerunner to modern portfolio theory. He noted the investor was seeking to both maximize expected return and minimize uncertainty. These are two conflicting objectives that must be balanced against each other. These two investment objectives lie behind the core reason why Standard & Poor's created the Star Ranking. It is not only important for an investor to determine a fund's risk-return profile, but also to see if the fund is matching it's stated objectives. Individuals investing in an ethical fund expect the fund to invest ethically, in the same way that they expect a fund with a stated objective to invest 80% or more in the S&P 500 to do just that. The Standard & Poor's Star Ranking assists investors in evaluating the performance of a fund and the consistency of that performance relative to other funds in the sector. It is calculated using a fund's monthly performance relative to its sector average for each of the 36 months over the three years to date. The average and volatility of these 36 numbers is used to calculate a fund's star rating. Continue Copyright ©2009 by InvestorGuide.com. All Rights Reserved.