FRC, a mutual fund research company in Boston, has issued a warning against a wrinkle in the new fund classification system which Lipper Inc. of Summit, N.J., is set to begin using next month.

Lipper's 14 new, narrow classifications for U.S. diversified equity funds - classifications based on market capitalization and investment style - could be undermined by four so-called "super-group" rankings that take only market capitalization into account, FRC said in a report issued in June. Mutual fund companies can choose to be ranked in either Lipper's 14 narrow classifications or the four super-groups - large-cap, multi-cap, mid-cap and small-cap - for their advertising and marketing materials.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.