Lipper, a Thomson Reuters company, presents these awards for “exceptional performance.” The awards were announced Friday.
Here’s the full list of group award winners:
- Best Large Group Overall: TIAA-CREF
- Best Small Group Overall: Delaware Management Co.
- Best Large Equity Group: PIMCO
- Best Small Equity Group: Causeway Capital Management
- Best Large Bond Group: OppenheimerFunds
- Best Small Bond Group: Commerce Investment Advisers
- Best Large Mixed Assets Group: Principal Management Corp.
- Best Small Mixed Assets Group: MassMutual Retirement Services
“These awards are based on their consistent performance,” said Tom Roseen, head of research services at Lipper. “They’re based on how a fund family has done over the past three years.”
As Roseen explained Lipper’s methodology, all fund companies are classed as either large or small. Currently, the break-point is $43.5 billion in assets under management. To be eligible for these awards, companies must have certain numbers of funds. For “best large overall,” for example, a company must have at least five equity funds, five bond funds, and three mixed asset funds; the “best small overall” award can go to a company with only three funds in each of those three areas. “These must be unique funds,” Roseen said. “A fund with multiple share classes is still one fund. Some very large, excellent fund families are not eligible because they have only a small number of funds.” (Mixed asset funds are those with holdings that cross asset classes, such as balanced funds with stocks and bonds.)
Among eligible companies, individual funds are ranked by risk-adjusted returns for various time periods. “For three-year returns,” Roseen said, “we look at the overall period, at 36 one-month returns, and so on. We penalize downside performance more than we reward upside performance because that’s how investors tend to behave. In the past, I’ve had people complain that they had higher returns than the award winners. I’ve replied that they are correct, but they took more risk to get those returns.”
Once consistent performance returns for individual funds are determined, they are placed in deciles within their asset class, with the 10% highest in the first decile. For group awards, the deciles are averaged: a hypothetical fund family with mixed asset funds in the second, fourth, and sixth deciles, for instance, would have an average of the fourth decile. The company with the lowest average decile rank will get the award; in case of a tie, the lowest average percentile rank determines the winner.