Lipper Leader Ratings The Lipper Ratings are derived from highly sophisticated formulas that analyze funds against a set of clearly defined metrics. Style boxes were created by Morningstar and designed to visually represent the investment characteristics of stocks and mutual funds.
You can learn more about the standards we follow in producing accurate, unbiased content in our The Lipper Rating for Total Return denotes a fund that has provided superior total returns (income from dividends and interest as well as capital appreciation) when compared to a group of similar funds. There are several different 4. 4 - The next 20% are scored 4. Each mutual fund gets a separate score for the factors of total return, consistent return, preservation, tax efficiency and fund expense. Much like Morningstar or Standard & Poor's, other Funds with a 5 rating are also referred to as Lipper Leaders. All ratings are computed and compared across different portfolios and fund types. The examples are not exhaustive and do not represent every type of short-, medium-, long-term investment horizon. In most cases, you see a fund refer to itself as a "Lipper Leader for Preservation" to help avoid confusion on this point.
All scores are computed independently and no fund receives a summary score; Lipper wants individual investors to decide which categories should be weighted most highly, so it does not aggregate in any way. Funds are ranked on a scale of 5 to 1 for each metric: 5 - Lipper Leader. It sounds impressive when a
Funds are only ranked against their peers. Funds are compared to similar funds, and only those that truly stand out are awarded Lipper Leader status. The top 20% is granted the title "
The next 20% is given a "2" rating. The Lipper Rating for Total Return may be the best fit for investors who want the best historical return, without looking at risk. The examples are not exhaustive and do not represent every type of short-, medium-, long-term investment horizon. According to Lipper, the company uses a U.S. Diversified Equity, or USDE, fund classification strategy. The Lipper Rating System is a five-tiered, five-category classification system that separates all funds into quintiles. By Lipper's own admission, there is more statistical flexibility for mid- and small-cap funds in how their portfolios are constructed. The Lipper rating system offers an investor-centered tool to assist in selecting mutual funds that suit the individual investor's goals and risk-and-return comfort level. The scores for the preservation of capital are separated into three broad asset classes: equity, mixed-equity, and bond funds. A mutual fund is a type of investment vehicle consisting of a portfolio of stocks, bonds, or other securities, which is overseen by a professional money manager. Separating fund leadership by score category is a noticeable difference between the Lipper system and other mutual fund rating methodologies. They were created by Morningstar and are most commonly used for mutual funds. Lipper Leaders--Total Matches. Lipper ranks individual funds with a ranking of 1 to 5, with 5 as the top score. Scores are subject to change every month and are calculated for three-year, five-year, ten-year and overall time frames. Lipper once focused primarily on two categories: consistency of return and preservation of capital. You may be familiar with the phrase "compared to its Lipper Average," a line repeated in many TV and radio advertisements for mutual funds. Lipper Leader ratings for Tax Efficiency reflect funds’ historical success in postponing taxable distributions relative to peers.