Dian's Column
Dian's Archive


Lipper Leaders

I recently ran into an old friend who said that she was finally interested in fund investing and asked how to research them on the Web. "I've looked at Morningstar's information. But isn't there other fund research out there that will tell me more and that's free?" she asked.

"Sure is," I answered and I told her to check out Lipper Leaders at www.lipperleaders.com."

In September 2001, Lipper Inc. introduced its Lipper Leaders fund research program. In a nutshell, Lipper Leaders takes all the 9,600 funds in its universe and scores each depending upon how it rates with other like funds when it comes to these five investment criteria: Total return; consistent return; preservation (of capital); tax efficiency; and expense.

The highest score a fund can receive in each category is a Lipper Leader orange check; the second highest, a 2 score; third best, a 3; and so on down to number 5---the lowest score available. By the time all the scores are in, the best a fund can do is receive five Lipper Leader orange checks---one under each heading. The worst a fund can receive is five 5's.

Looking at a how a fund score's is just one of the many things that a visit to www.lipperleaders.com shows. Updated at the end of each month, a visit to the site can keep interested investors occupied for hours researching funds by their :

- classification ( this includes all kinds of funds from growth to convertible funds, global to municipal bond funds and a host of other types in between);

- asset type ( equity, fixed-income or mixed-equity income funds);

- specific name ( such as AIM or Vanguard funds); and,

- various investment time periods (three, five, 10 years, or overall).

"This is an excellent way to learn about investing through your own eyes," says Jeff Tjornehoj, a research analyst at Lipper Inc. "You have to think about what's important to you, what your goals are, and what your investment strategy is." " So, it kind of forces people to think, and I think that's one of high points in this. "

Tjornehoj said that though many investors can become enchanted by the hottest performing funds or the category of funds getting the most attention, Lipper Leaders don't always highlight those kinds of funds right off the bat. " You really have to dig around to find those sorts of characteristics." Tjornehoj said. "So, there is no tail-wind effects here. You're not going to be pushed into technology because they (tech funds) don't all get high ratings just because tech was in style."

To date, not many funds in the Lipper Leaders score program are orange-check scorers in all five categories. The few that are, may not all be of one fund type. For instance, looking at funds that are Lipper Leaders in all categories, only two made the grade for the past 10 years---The Eaton Vance Tax-Managed Growth Fund (CAPEX). It's average annual total return for the past 10 years ending April 30, 2003 was 11.26 percent. And, the Fidelity ADV Equity Income Fund (EOPIX). Over the past 10 years, its average annual total return was 10.01 percent.

Looking at a shorter time frame, four funds received top Lipper Leader honors over the past five years ending April 30. There were the Bridgeway: Ultra Small-Cap fund (BRSIX); the Colorado Bond Fund (HICOX); the USAA Tax-Exempt Short-Term fund (USSTX): and Vanguard's Limited Term Tax-Managed fund (VMLTX)

Being able to see all the funds that one fund family offers, and how each scores under the Lipper headings, is another valuable research feature.

On the downside, navigating to Lipper Leaders isn't a one-click step. Nor is the information as reader friendly as say Morningstar's snapshot reports are. But then again, Lipper Leaders is a different research animal that looks at only five investment criteria.

So, while making your way to and through all the information available may take some time, it will be time worth spent for those who want to know how their fund measures up in departments such as tax-efficiency, total return, expenses, consistent returns and preservation of your capital.

To get to Lipper Leaders go to www.lipperleaders.com . Click on the "United States" link under the "Select Country" column on the left side of the home page. Once on this new page, click on "Find a Fund" on the page's left side. You'll then come to a page with a box in the center titled "Fund Display." This is where you can play the day away looking and learning about what funds make the Lipper Leader cut and those that don't. And, how which funds may---or may not---fit into your portfolio.


Dian Vujovich is a nationally syndicated mutual fund columnist, author of a number of books including Straight Talk About Mutual Funds (McGraw-Hill), and publisher of this web site.

To read more articles, please visit the column archive.

[ top ]