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

The software, called Lipper-Barra Mutual Fund Risk Factor, allows advisers and 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 assess 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, said investors have "had a limited ability to measure the risk in a mutual fund."

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