What Are Lipper Indexes?
Let me explain Lipper Indexes directly to you: they are benchmarks that track the performance of different managed fund strategies by averaging the returns of the largest publicly traded funds within those strategies.
Key Takeaways
You should know that Lipper Indexes serve as benchmarks for actively-managed mutual fund performance across a range of strategies and asset classes. Depending on the strategy, they use anywhere from 30 to 100 individual funds to calculate performance. These indexes have become a standard reference when reporting fund performance to investors and analysts.
Understanding Lipper Indexes
Lipper Indexes are constructed and managed by Lipper, which is owned by Reuters. They cover nearly every type of mutual fund strategy in the investable market. You can find public disclosures of their performance in the Wall Street Journal and Barron’s.
To build each index, Lipper averages the returns of funds in the market that follow the index’s strategy. The funds are selected based on assets under management, and the number varies—most indexes use about 30 to 100 funds.
These indexes often appear in mutual fund performance reports. Investment managers use Lipper data in client reporting, and a Lipper Index might even serve as a fund’s primary benchmark.
Lipper Index Analysis
Lipper Indexes can provide you, as a retail investor, with insight into the best-performing strategies and how various strategies perform over different market periods. Through their resources, Lipper shares data on top and bottom-performing indexes in different categories.
For example, one-year returns through July 24, 2021, show the Lipper Upright Growth Fund as the top performer in global equity with 168.7%, while the Lipper SGA International Equity Fund was the worst at -82.02%. Remember, performance changes yearly, and funds come and go.
In bonds, the Lipper UBS FI Enhanced Global High Yield led with 24.17%, and the Lipper Intermediate US Government Index trailed at -0.87%.
In money markets, returns from January 5, 2018, ranged from 0.2% for the top Lipper Transamerica Government Money Market Fund to 0.01% for the bottom Lipper Legg Mason Partners Premium Money Market Trust.
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