Analyst Insights and Definitions  

Morningstar RiskAdjusted Return (MRAR)


D E F I N I T I O N MRAR is a measure of a fund's annualized historical excess return (excess is measured relative to riskfree investment in Canadian Government Treasury Bills) adjusted for the fund's historical volatility. The exact formula for MRAR is Where r_{t} is the monthly excess return, i.e. [(1+fund return)/(1+TBill return)1] X 100 and is a constant risk tolerance parameter. Morningstar's analysts have concluded that = 2 results in fund rankings that are consistent with the risk tolerances of typical retail investors. MRAR is calculated for t = 36, 60, and 120 months depending on the length of performance history available for a fund. 