Investing July 29, 2003

Lipper Fund Matrix Goes Global

July 29, 2003 (PLANSPONSOR.com) - Lipper, already well known for its matrix-based classifications for domestic mutual funds, is bringing that same discipline to international and global funds open to US investors.
Reported by

According to a company news release. Lipper will model the new system after the firm’s US Diversified Equity matrix, which classifies funds based on the characteristics of their underlying stock holdings, rather than on broad language in the fund prospectus. Lipper decided to implement the change in January 2004 to give participants in the fund marketplace time to adapt.

In January 2004, funds that are currently in one of four categories (International, International Small-Cap, Global, and Global Small-Cap) will be classified according to the new style/marketcap matrices. The four categories currently contain nearly 1,400 separate share classes accounting for more than $300 billion in assets. Separate matrices will be created for Global funds, which own US stocks, and for International funds, which do not, the company said.

Lipper’s Active Indices will be created for the new classifications, and funds’ Lipper Leader scores will be based on the new system as well. The existing prospectus-based classifications will continue to be available for firms that prefer to use them in their internal benchmarking.

In preparation for the system’s launch, Lipper will make available preliminary characteristics of the new classifications so that asset management firms can predict the likely categories for their international and global funds.

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