What is the Lipper average?
The Lipper average is a set of indexes used to measure how well an investment portfolio is performing compared to others. It's also used by investors to work out how well an investment firm or mutual fund investment is doing compared to its competitors.
Where have you heard about the Lipper average?
You might have heard a mutual fund advert talk about how a percentage of its funds – for example, 90% – beat its Lipper average. That means that the fund's returns were 90% better than those of its competitors.
What you need to know about the Lipper average.
The Lipper average is established by Lipper, a company parented by Thomas Reuters that provides a range of analytical tools and mutual fund information. It's calculated on a quarterly and annual basis, and is organised by categories like industry, sector, country and market capitalisation. That means that an investment portfolio could measure up more positively in one category than another.
The Lipper average is a useful motivator for portfolio managers to try and beat the benchmark and set themselves apart from their competitors.