Fund ratings and indices
Lipper Leaders Rating System
The Lipper Leaders Rating System is a mutual fund rating system that uses investor-centered criteria, such as capital preservation, expense and consistent return. Funds are rated on a numeric scale of 5 to 1, with ‘5’ representing funds with the highest rating or Lipper Leaders, and ‘1’ representing the lowest rated funds.
The Lipper Ratings are derived from formulas that analyze funds against defined criteria. Funds are compared to similar funds within a peer group. Each fund is ranked against its peers based on the metric used (such as Total Return or Expense), and the highest 20% of funds in each peer group are named Lipper Leaders, the next 20% receive a rating of 4, the middle 20% are rated 3, the next 20% are rated 2, and the lowest 20% are rated 1. While Lipper Leader Ratings are not predictive of future performance, they are designed to provide context and perspective for making knowledgeable fund investment decisions.[7]
The ratings are subject to change every month and are calculated for the following periods: three-year, five-year, ten-year, and overall. The overall calculation is based on an equal-weighted average of percentile ranks for each metric over three-, five-, and ten-year periods (if applicable).
The Lipper Ratings metrics: Total Return, Consistent Return, Preservation, Tax Efficiency (US Only), and Expense
Lipper Indices
Lipper Indices are a set of benchmarking tools used to track, monitor and analyze fund performance. Several of Lipper's 160 indices for the open-end, closed-end, and variable annuity universes track performance since the early 1960s.[8]
Indices: Lipper Sector Indices, Thomson Reuters Lipper Optimal Indices, Thomson Reuters Lipper Premium Indices, Lipper Active Indices
