Minimum Criteria for Inclusion in Best Money Managers


Comparing and ranking performance results can be a tricky business.

While honest and intelligent people can disagree over what the "best" methods are for calculating and presenting performance data – we as publishers of a ranking service – must have standards which assure a certain level of comparability between managers.

So, while the Lipper Investment Manager Database is very open in terms of accepting a variety of calculation and reporting methodologies, only those performance streams which meet the qualifications outlined below are considered for the World's Best Money Managers rankings.

Once again, Lipper does not imply or represent that only performance which meets these qualifications are "valid”. Rather, the qualifications are enforced for the sole purpose of ensuring comparability between managers. If you have any comments regarding these requirements, feel free to Contact Us.

Here are the minimum criteria for inclusion in Best Money Managers:

  1. Performance must be calculated "net” of all fees and brokerage commissions. This means after all fees have been deducted.

  2. This standard is somewhat controversial, as the SEC requires that only "net” of fees numbers be presented publicly, while GIPS (Global Investment Performance Standards) prefers that "gross” numbers be presented along with a fee schedule.

    Since the SEC is a regulatory authority, and since complete fee schedule presentation would be impractical in this "ranking" format, we require "net” numbers.

  3. Performance must be calculated inclusive of all cash reserves.
  4. To explain, any given investment portfolio will hold some level of cash over a particular reporting period. Even equity portfolios which specifically seek to be fully invested in the market at all times will temporarily have dividend payments and other ordinary cash flows which cannot instantaneously be invested in the market.

    These cash holdings obviously will have an effect on the performance of the overall portfolio – negative when cash returns are low relative to returns of the asset class, and positive if the opposite is true.

    While presentation of "equity-only” (for example) returns may provide a valuable insight into the security selection skills of the manager, we require for comparability's sake that performance results be inclusive of cash reserves for consideration in the rankings.

  5. Performance results must be calculated in U.S. dollars, that is, from the perspective of a U.S.-based investor.

  6. Currency holdings can have a very significant impact on the performance of a portfolio with international holdings. While this will always be the case (as we do not make distinctions between hedged and unhedged portfolios), we require that performance must be translated into U.S. dollars to ensure comparability to the point where these are all returns that would be seen by a U.S.-based investor.

  7. Performance results must be calculated on an asset base which is at least $10 million in size for "traditional” U.S. asset classes (equity, fixed income, and balanced accounts) or at least $1 million in the case of international and "alternative” U.S. asset classes.
  8. This minimum ensures that the firm and product are somewhat established. The goal is to not taint the rankings with "flashes in the pan” while also not excluding promising emerging managers.

    The minimum asset base requirement, therefore, is set at a level which balances these objectives.

  9. The classification of the product must fall into one of the categories which we rank. We only publish rankings for categories/time period combinations for which we have at least 20 contenders.

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