While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance.
Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. It is important to remember that most of these securities are designed for daily use only, and are not intended to be held overnight or long term. Investors holding these ETPs should therefore monitor their positions as frequently as daily. Leveraged and inverse ETPs are subject to substantial volatility risk and other unique risks that should be understood before investing. Aggressive investment techniques, such as futures, forward contracts, swap agreements, derivatives, and options, can increase ETP volatility and decrease performance.
Consequently, these ETPs may experience losses even in situations where the underlying index or benchmark has performed as hoped. Compounding can also cause a widening differential between the performances of an ETP and its underlying index or benchmark, so that returns over periods longer than one day can differ in amount and direction from the target return of the same period. Due to the effects of compounding and possible correlation errors, leveraged and inverse ETPs may experience greater losses than one would ordinarily expect. Inverse ETPs seek to provide the opposite of the investment returns, also daily, of a given index or benchmark, either in whole or by multiples. Leveraged ETPs (exchange-traded products, such a ETFs and ETNs) seek to provide a multiple of the investment returns of a given index or benchmark on a daily basis. Diversification does not eliminate the risk of investment losses. A call right by an issuer may adversely affect the value of the notes. Sector investing may involve a greater degree of risk than an investment in other funds with broader diversification. ETNs may have call features that allow the issuer to call the ETN. ETNs containing components traded in foreign currencies are subject to foreign exchange risk. Leveraged and inverse ETNs are subject to substantial volatility risk and other unique risks that should be understood before investing. ETNs may be subject to specific sector or industry risks. The market value of an ETN may be impacted if the issuer's credit rating is downgraded.
The repayment of the principal, any interest, and the payment of any returns at maturity or upon redemption depend on the issuer's ability to pay. ETNs are not secured debt and most do not provide principal protection. All Rights Reserved.Exchange-Traded Notes (ETNs)ETNs are not funds and are not registered investment companies. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2019 and/or its affiliates. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN.
Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. Factset: FactSet Research Systems Inc.2019. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes.
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