Lipper Rankings

Lipper is a global performance tracking company that ranks mutual funds and ETFs on a weekly, monthly, and yearly basis.

This allows you to know which funds are the top-performing ones. It’s important that you look at these rankings in order to make a decision on whether or not a particular fund is suitable for your investment needs.

Why Should I Care About These Rankings?

There are a number of reasons why these rankings matter to your portfolio.

First and foremost, you want to know if a certain type of fund is doing well so you can be confident that it will continue to do well in the future.

Additionally, comparing funds helps you to understand what type of investment goals a particular fund is trying to achieve.

This knowledge can help you to better diversify your portfolio and to find the right funds for your specific needs.

What Is a Mutual Fund?

A mutual fund is a collection of stocks, bonds, and other securities that are packaged together and offered to investors.

Mutual funds offer investors a way to invest in a variety of assets at once, which can be helpful if you don’t have the time or knowledge to do so yourself.

When you invest in a mutual fund, the money you invest is pooled together with other investors and put into a portfolio that meets certain needs.

The Top 10 Mutual Funds for 2021

Here’s a list of the top 10 mutual funds for 2021:

  1. T. Rowe Price Science & Tech Fund (PRSCX) – 13+ Year Annualized Return: 8.59%
  2. Parnassus Endeavor Fund (PARWX) – 5-Year Annualized Return: 9.05%
  3. Parnassus Fund (PARNX) – 5-Year Annualized Return: 9.18% 4. Hussman Strategic Growth Fund (HSGFX) – 3-Year Annualized Return: 10.36%
  4. MFS International Value Fund Class R4 (MINJX) – 5-Year Annualized Return: 8.68%
  5. Fidelity Advisor New Insights Fund (FANIX) – 5-Year Annualized Return: 10.02%
  6. Dodge & Cox International Stock Fund (DODFX) – 3-Year Annualized Return: 7.94%
  7. Vanguard Wellington Fund Admiral Shares (VWENX) – 3-Year Annualized Return: 8.47%
  8. Fidelity Growth Company Fund (FDGRX) – 3-Year Annualized Return: 11.35%
  9. American Beacon International Opportunities Fund Class R6 (AVEOX) – 5-Year Annualized Return: 9.63%

What Is an Exchange-Traded Fund (ETF)?

An ETF is very similar to a mutual fund, except it trades like a stock on an exchange.

This means that instead of buying shares directly from the company like you would a stock, ETF shares are traded on a secondary exchange.

One of the biggest benefits of investing in an ETF is that they often have lower fees than mutual funds.

The Top 10 Exchange-Traded Funds for 2021

Here’s a list of the top 10 Exchange-Traded Fund for 2021:

  1. Vanguard Growth ETF (VUG) – 3-Year Annualized Return: 11.47%
  2. iShares Russell 1000 Value ETF (IWD) – 3-Year Annualized Return: 7.87%
  3. SPDR S&P Dividend ETF (SDY) – 3-Year Annualized Return: 7.11%
  4. Vanguard Value ETF (VTV) – 3-Year Annualized Return: 10.07%
  5. iShares MSCI EAFE Value ETF (EFVL) – 3-Year Annualized Return: 4.02%
  6. Schwab International Equity ETF (SCHF) – 3-Year Annualized Return: 7.17%
  7. WisdomTree Japan Hedged Equity Fund (DXJ) – 3-Year Annualized Return: 5.48%
  8. Vanguard FTSE All-World ex-US ETF (VEU) – 3-Year Annualized Return: 5.98%
  9. WisdomTree Emerging Markets Equity Income Fund (DEM) – 3-Year Annualized Return: 5.48%
  10. Schwab U.S. Broad Market ETF (SCHB) – 3-Year Annualized Return: 9.65%

How They Are Calculated

Every time an investor logs into his or her account, the fund company sorts through data on the shares and the share prices of all securities in order to calculate an updated net asset value.

This is what determines how much money each fund has made on its investments since the last calculation.

To create a ranking for each fund, Lipper uses daily returns and weights them based on market capitalization, which ultimately means that larger funds with more investments will affect the results.

Rankings are based on the performance of each fund over certain periods (such as three months, one year, five years, and 10 years).

Things to Consider Before Investing in a Fund  

When looking at a Lipper Ranking, it’s important to consider a few things before investing in a mutual fund and exchange-traded fund.

Keep in mind that past performance doesn’t always indicate future results, and remember to do your research on a fund before investing in it.

For example, The Vanguard Wellington Fund (VWELX) and the American Funds Growth Fund of America (AGTHX) are both in the top 20 for five-year annualized returns.

However, the Vanguard Wellington Fund has an expense ratio of 0.25% compared to an expense ratio of 1.11% for the American Funds Growth Fund of America.   

Additionally, if you’re looking to invest through your 401(k) or IRA, remember that some funds have limited investment options.

For example, the Fidelity Advisor New Insights Fund invests only in Fidelity mutual funds.

So make sure to consider all of these things before investing in a fund.

Final Thoughts

Mutual funds and exchange-traded funds are sorted into categories by Lipper Rankings according to their performances over a designated period of time.

This system is a good way to get an overall snapshot of how a particular type of fund is doing, and it can help you to decide if you want to invest in one.

Remember that each individual fund may have different risks and rewards, so it’s important to do your own research before investing.

Lipper rankings are a way of sorting mutual funds and exchange-traded funds based on their performance. The system is divided into categories with sub-categories, depending on the type of fund.
These rankings are one way to compare different types of investments. They can help you to decide which kinds of funds are best for your needs, and whether or not certain kinds of funds would be a good choice for your portfolio.
The Lipper Ranking system uses daily returns to sort funds into their appropriate categories. The data is collected from fund companies and weighted according to market capitalization in order to create the rankings.
Before you invest in a fund, make sure to consider the expenses for each fund and how often it is updated. It's also important to do your research before investing. You may want to consult with a financial adviser as well.
When looking at Lipper Rankings, it's important that you consider the individual funds. Some funds may have a higher risk than others, and some may have a higher reward. It's also important to look at the expense ratios of the funds and how they are updated.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.