Lipper Indexes are indexes that track the financial performance of different types of managed fund strategies. Each index is based on the performance of the largest publicly traded funds in the strategy group.
Breaking Down Lipper Indexes
Lipper Indexes are constructed and managed by Lipper which is owned by Reuters. Lipper manages indexes for nearly every type of mutual fund strategy in the investable market. Public disclosure of Lipper Index performance is provided by the Wall Street Journal and here by Barron’s.
To construct each index, Lipper averages the returns of funds in the investable market that are managed to the Index’s strategy. Funds used for index return calculations are chosen by assets under management. The number of funds used by Lipper to obtain Lipper Index performance varies broadly. Most Lipper Indexes use approximately 30 to 100 funds to obtain index performance.
Lipper Indexes are often included in mutual fund performance reporting. Investment managers may use Lipper and Lipper Index data in reporting for their clients. A Lipper Index may also be used as a mutual fund’s primary benchmark.
Lipper Index Analysis
Lipper Indexes can help give retail investors insight into the best performing strategies as well as the performance of various strategies throughout different market timeframes. Through this webpage, Lipper provides investors with information on the best and worst-performing indexes across market categories.
One-year Lipper Index returns through January 5, 2018, show the Lipper China Reg Fund Index as the top-performing strategy in the global equity category. This strategy reports a one-year return of 54.30%. Meanwhile, the worst-performing global equity strategy over the past year has been the Lipper Short Bias Index, which represents the performance of funds shorting equity stocks. The Lipper Short Bias Index has a one-year return of -27.50%. It should be noted that performance data changes every year, and that new funds may be created or older funds cease to operate over time.
In the bond market, the Lipper Emerging Markets Local Debt Fund Index is the top-performing strategy with a one-year return of 18.20%. The worst performing strategy in the bond market over the past year has been the Lipper Alternative Currency Strategy Fund Index. This strategy has a one-year return of -1%.
In the money market category, Lipper Index returns ranged from 1.02% to 0.30% over the one-year period through January 5, 2018. The top-performing index was the Lipper Institutional Money Market Index with a return of 1.02%. The worst performing fund in the category was the Lipper New York Tax-Exempt Money Market Index with a return of 0.30%.