In order to sidestep the challenge of accurately rating new mutual funds, Lipper has announced new technology designed to evaluate new mutual funds based on old mutual funds.
The system, rather long-windedly dubbed Pre-Initial Public Offering performance methodology, will take a new fund and hook it into the "expense-adjusted performance of its parent fund."
Because the industry has so many different ways of linking performances together, it is hard to accurately project new or even evaluate existing information for new funds, Lipper said. The handling of limited amounts of information becomes a problem.
But the company said, "Lippers Pre-IPO Performance methodology standardizes the process to make for more accurate assessments of a fund versus its peers."