Highly rated mutual funds are those that are rated by Morningstar with a four or five star rating.
Morningstar calculates a Morningstar Rating for every fund each month, by subtracting the return on a 90-day U.S. T-Bill from the fund's load-adjusted return for the same period, and then adjusting this excess return for risk.
Ratings are given by the following rule: top 10% of funds in each broad asset class receive 5 stars, next 22.5% gains 4 stars, 35% funds in the middle receive 3 stars, the next 22.5% receive 2 stars, and the last 10% receive 1 star.
