Updated August 10, 2026. Quick answer. Not reliably at the top end. The most direct test of this question — The Wall Street Journal’s October 2017 investigation — found that of funds holding a five-star rating, only 12% still earned a top rating five years later, while Morningstar’s own research shows expense ratios predict future success more consistently than star ratings do. The honest verdict: stars are a reasonable screen, not a forecast.
What the Wall Street Journal actually found (October 2017)
The Journal’s investigation, widely referred to afterward as “The Morningstar Mirage,” tracked what happened to five-star-rated funds over the following five years. As reported by InvestmentNews, the findings were stark: only 12% of five-star funds kept a five-star rating five years later, and 10% of five-star funds fell all the way to a one-star rating in that same period. Investor money followed the ratings regardless — the Journal’s data, per the same report, showed roughly $188.3 billion flowing into five-star funds over a 12-month period, against $18.5 billion leaving them, while lower-rated funds saw comparatively larger net outflows ($133 billion out of three-star funds, $109.2 billion out of two-star funds in the same window).
Morningstar’s own response
Morningstar didn’t dispute the Journal’s underlying numbers so much as its framing. Jeffrey Ptak, Morningstar’s head of global manager research, responded (as quoted by InvestmentNews) that the star rating is “a report card on fund performance, not a crystal ball,” and argued that even using the Journal’s own data, highly rated funds were still more likely to outperform low-rated funds going forward than the reverse — i.e., some predictive signal survives, just a weaker one than the rating’s five-tier precision implies.
Both sides, read together, agree on the same practical point: a star rating describes what a fund has already done on a risk-adjusted basis. It is not, and was never designed to be, a guarantee of what it will do next.
The signal that held up better: fees
Separately, Morningstar’s own manager-research team has run the opposite test — not “do stars predict the future” but “does cost predict the future” — repeatedly, across different time windows, with the same answer each time. Russel Kinnel’s original 2010 study (as reported by CBS News) found that in every asset class tested, cheaper funds outperformed pricier ones; his later “Predictive Power of Fees” white paper (covering 2010-2015, as reported by NAPA-Net) found the cheapest quintile of U.S. equity funds succeeded — survived and beat their category — 62% of the time, versus 20% for the priciest quintile. The full breakdown is on our companion page, expense ratios vs. star ratings.
The honest verdict
Use a star rating the way both sides of this debate actually describe it: as a fast way to screen a large universe down to a shortlist, not as the final word on which fund to buy. The evidence above says the more durable filter, tested over more years and more asset classes, is what a fund charges you every year — not how many stars it currently carries. Neither signal, alone, replaces reading the fund’s own current holdings and category before you buy.
Sources
“Advisers weigh in on Wall St. Journal’s Morningstar ratings critique,” InvestmentNews, November 2017, reporting on the Wall Street Journal’s October 2017 investigation and Morningstar’s response. “Which Is a Better Performance Predictor: Star Ratings or Expense Ratios?”, CBS News, reporting on Russel Kinnel’s 2010 Morningstar study. “Morningstar: Fund Fees a Predictor of Future Success,” NAPA-Net, February 2019, reporting on Kinnel’s “Predictive Power of Fees” white paper (study period 2010-2015). Morningstar.com and WSJ.com were not directly fetchable for this page; every figure above is attributed to the secondary report that carried it, not reconstructed from memory.
Past performance and past ratings do not guarantee future results. Not investment advice.
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