Lipper and Barra have partnered to create new software that helps mutual funds assess the risk involved with investing in certain securities, the companies said this week.

The software, called Lipper-Barra Mutual Fund Risk Factor, allows advisors and other financial institutions to evaluate a mutual fund’s risk compared to its category as well as broader fund categories. Lipper said that the product forecasts a fund’s expected performance range over the course of a year, then produces a graph that can be used to asses whether a fund will best serve a specific client. Funds are then compared to their peers within Lipper’s classification system, as well as their asset classes.

Robin Thurston, Lipper’s director of research and marketing, said in a statement that investors and advisors have "had a limited ability to measure the risk in a mutual fund," and that the new product is designed to solve that problem.

The software is available as a Web-based application as well as an XML feed and conventional "tab-delimited" data feed.

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