Mutual Funds - Lipper Leader Definitions
Lipper Leaders:
The Lipper Leaders Rating System is a set of tools that guide investors and their advisors to select funds that suit individual investment styles and goals. The Lipper Leaders Ratings System uses investor-centered criteria to deliver a simple, clear description of a fund's success in meeting certain goals, such as preserving capital or building wealth through consistent strong returns. The strength of the Lipper Leader measures, built on three-, five-, and/or ten-years of historical performance is their use in conjunction with each other. Measures can be viewed and evaluated together to find a fund that meets the particular characteristics and interests of the investor. Overall Ratings are based on an equal-weighted average of percentile ranks for each measure over three-, five-, and ten-year periods (if applicable).
Lipper Leader ratings are derived from highly sophisticated formulas that analyze funds against clearly defined criteria. Open-End funds (except Money Market funds) are compared to similar funds, and only those that truly stand out are awarded the Lipper Leader status. Each fund is ranked against its peers based on the metric used (such as Total Return or Expense), and then the top 20% of funds in that ranking receive the Lipper Leader designation. Lipper Leaders measures are not predictive of future performance, but they do provide context and perspective for making knowledgeable fund investment decisions.
Lipper Leaders for Total Return
A Lipper Leader for Total Return is a fund that has provided superior total returns when compared to a group of similar funds.
Lipper Leaders for Total Return may be the best fit for investors who want the best historical return, without looking at risk. This measure alone may not be suitable for investors who want to avoid downside risk. For more risk-averse investors, the Total Return ratings can be used with Preservation and/or Consistent Return ratings to make an appropriate selection that balances the risk and return.
Lipper Leaders for Consistent Return
A Lipper Leader for Consistent Return is a fund that has provided superior consistency and risk-adjusted returns when compared to a group of similar funds. Lipper Leaders for Consistent Return may be the best fit for investors who value a fund's year-to-year consistency relative to other funds in a particular peer group.
Investors are cautioned that some peer groups are inherently more volatile than others, and even Lipper Leaders for Consistent Return in the most volatile groups may not be well-suited to shorter-term goals or less risk-tolerant investors.
Lipper Leaders for Preservation
A Lipper Leader for Preservation is a fund that has demonstrated a superior ability to preserve capital in a variety of markets when compared with its asset class-equity, mixed equity, or fixed-income funds.
Choosing a Lipper Leader for Preservation may help to minimize downside risk relative to other fund choices in the same asset class. Investors are cautioned that equity funds have historically been more volatile than mixed equity or fixed income funds and that even Lipper Leaders for Preservation in more volatile asset classes may not be well-suited to shorter-term goals or less risk-tolerant investors.
Lipper Leaders for Expense
A Lipper Leader for Expense is a fund that has successfully managed to keep its expenses low relative to its peers and within its load structure.
Lipper Leaders for Expense may be the best fit for investors who want to minimize their total cost. It can be used in conjunction with Total Return or Consistent Return to identify funds with above-average performance and lower-than-average cost.
Lipper Leaders for Tax Efficiency (US Only)
A Lipper Leader for Tax Efficiency (US only) is a fund that has been successful at postponing taxes over the measurement period relative to similar funds.
Lipper Leaders for Tax Efficiency may be the best fit for tax-conscious investors who hold investments that are not in a defined benefit or retirement plan account. Investors in high federal tax brackets are likely to see more benefit from tax-efficient funds than those in lower tax brackets.
Tax Efficiency on its own does not take relative or absolute performance into account. Investors can pair Tax Efficiency with Consistent Return and/or Total Return to find funds that have delivered solid relative performance and have postponed taxable distributions better than their peers.
Lipper Leaders Disclaimer
Lipper Ratings for Total Return reflect fund historic total return performance relative to peers. Lipper Ratings for Consistent Return reflect fund historical risk-adjusted returns relative to peers. Lipper Ratings for Preservation are relative, rather than absolute. Lipper Ratings for Expense reflect fund expense minimization relative to peers. Lipper Ratings for Tax Efficiency (U.S. Only) reflect fund historical ability to postpone taxable distributions. Lipper Ratings DO NOT take into account the effects of sales charges. Overall Ratings are based on an equal-weighted average of percentile ranks for each measure over 3-, 5-, and 10-year periods (if applicable).
Lipper Ratings do not constitute and are not intended to constitute investment advice or an offer to sell or the solicitation of an offer to buy any security of any entity in any jurisdiction. As a result, you should not make an investment decision on the basis of this information. Rather, you should use Lipper Ratings for informational purposes only. Certain information provided by Lipper may relate to securities that may not be offered sold or delivered within the United States (or any State thereof) or to, or for the account or benefit of, United States persons.
Lipper is not responsible for the accuracy, reliability or completeness of the information that you obtain from Lipper. In addition, Lipper will not be liable for any loss or damage resulting from information obtained from Lipper or any of its affiliates.