Lipper seeks higher profile in Canada

If your favourite funds didn’t do well at the Canadian Investment Awards this year, don’t despair. Mutual funds will get a second kick at the can next month when Lipper, the U.S.-based mutual fund rating service, hosts its first annual awards gala in Toronto.

Bragging rights — and a small trophy — will be up for grabs when Lipper hosts the event at the St. Andrew’s Club and Conference Centre in Toronto on March 15. The awards gala is the public face of Lipper’s foray into Canada, which began last year when the Reuters affiliate joined the Canadian Investment Funds Standards Committee.

The awards are based strictly on Lipper’s mathematical methodology of consistent return over three-, five- and 10-year periods.

The awards ceremony will likely give Lipper a much needed boost in visibility. Since joining the CIFSC, the organization has been noticeably quiet. When asked, most advisors say they are unfamiliar with the services Lipper offers. Of those who are familiar with the fund rating company, many suggested the Canadian market is already saturated with similar services provided by Morningstar Canada and GlobeFund.

“It’s not on our radar screen,” says an investment advisor who asked not to be named. “I have heard of them but wasn’t aware of their plans of coming to Canada.” The advisor’s comments are indicative of what many are saying about Lipper.

James Gauthier, an investment funds analyst with Dundee Securities Corp. was one of the few people familiar with Lipper, although he adds that he would have to see what sort of products the company makes available for the Canadian market before he can comment on their value.

Unlike others who are skeptical about what Lipper can add to Canada, Gauthier is at least willing to look. “If something is good, I’d likely go with it,” he says.

Another fund analyst who asked not to be named, says that while Morningstar is the preferred channel in the retail world, his U.S. counterparts believe Lipper’s categories, which have been around longer, are tighter.

Interestingly, while U.S. fund managers are benchmarked against their Lipper peer group, this analyst says most funds use Morningstar to market their products. “Overall, I would say at a money management level in the U.S., Lipper is the preferred provider and is highly credible.”

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• Morningstar, CIFSC extend olive branch • Lipper sets sights on Canada

Lipper launched Hindsight in Canada in June 2006. So far Lipper figures it has about 98% of the Canadian market covered off, says Jeff Tjornehoj, one of the company’s senior research analysts. “All of our energy in Canada is being spent covering that last 2% as well as come out with new products out there,” he says.

Later this year, Lipper will roll out the Lipper Leader tool box rating for Canadian investors, says Tjornehoj, although he is unable to provide a specific date. By the end of the first quarter Lipper will begin receiving portfolios from the 25 largest fund managers in Canada. “These are full holdings,” says Tjornehoj. “Last I checked the top 25 managers accounted for about 75% of the Canadian fund assets.”

All of this data will be added to Lipper’s Hindsight product, a Windows-based fund performance desktop tool company marketing and performance analysis departments for analyzing funds in a number of markets, similar to Morningstar’s PALtrack. Currently, Lipper is offering trials to qualified advisors who want to check out Hindsight.

Jed McKnight, who was leading the Lipper charge into Canada, has moved on to another position within the organization. Andrew Clark, Lipper’s head of research for the Americas, has taken his seat on the CIFSC. Unlike Lipper’s false start on the CIFSC in 2003, the organization has been an active contributor to the standards committee.

Filed by Mark Brown, Advisor.ca, mark.brown@advisor.rogers.com

(02/05/07)