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Lipper revamp aims to boost comparisons

Rating agency Lipper is developing a new fund classification structure based on analysis of underlying holdings in a bid to offer IFAs and investors more detailed performance comparisons.

The structure should allow IFAs to compare the funds in Lipper&#39s UK, European, global and North American equities categories using style and market capitalisation considerations.

It could, for example, break down the UK All Companies sector by cap size – small, mid, large, micro and multi – and by core, value or growth investment styles.

IFAs will be able to create benchmarks from the indices created from the expanded categories, giving them far more detailed performance comparisons.

They will be able to access the new structure, which is designed to complement rather than replace the IMA&#39s sectors, directly through Lipper&#39s classifications or through the IMA classifications, which Lipper administers.

The company intends to implement the structure around the end of the third quarter but says that, as it is still undertaking the background research, the breakdowns – especially the style element – could be subject to change. Once they are implemented, Lipper will look at expanding the structure beyond its four main equity classifications.

Head of research Brian Harvey says: “We are making a structure which will suit the needs of individuals and give them another level of identification and comparison. It is not meant to replace any existing classifications.”

Bestinvest fund research analyst James Calder says: “Anything that helps IFAs&#39 ability to measure performance more appropriately would be really helpful. It would make our life easier.”


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