Lipper Leader

See: Lipper Indexes.

We’ve been asked to put together a list of our twenty favorite songs. We spent some time trying to come up with a single criterion by which to judge a song’s worthiness, but we just can’t. After all, there are different things that make different songs awesome. Maybe it’s the artist, or maybe it’s the lyrics. Maybe it’s the genre. Maybe it’s the general catchiness of the tune. Hmm, looks like we’re going to need to use multiple criteria to create our Best Of list.

When we’re judging the awesomeness of mutual funds, we also need to use multiple criteria. In fact, when Thompson Reuters Lipper (a big-time investment firm) identifies the best of the best, they look at several indicators: capital preservation, consistent return, expenses, tax efficiency, and total return. The mutual funds that rank the highest in at least one of those categories—like, within the top 20%—get the coveted status of Lipper Leader.

Just because a fund is a Lipper Leader, though, doesn’t mean it’s going to perform that well forever and ever after (blah blah, past performance doesn’t indicate future performance, blah blah). But looking at Lipper Leader info can help us identify trends, which can be good if we’re trying to find longer-term investment opportunities that are maybe a little less volatile and more predictable.