Lipper categories explained

January 13, 1991

Lipper Analytical Services Inc., the leading statistical tracker of mutual funds (excluding money market funds), divides the funds into 27 categories and issues quarterly and monthly reports on their performance. Here are the Lipper categories and the broad definitions of how funds in each group invest their holdings, or portfolios, preceded by their abbreviated forms:

CA -- Capital appreciation. A fund that aims at maximum capital appreciation, frequently by such means as the aggressive turnover of holdings in the fund's portfolio (100 percent turnover would mean, for example, that assets equal to all the fund's holdings were turned over, or reinvested, in a year's time), leveraging, purchasing unregistered securities and purchasing options. The fund may take large cash positions.

G -- Growth. A fund that usually invests in companies whose long-term earnings are expected to grow significantly faster than the earnings of the stocks represented in the major stock indexes.

SG -- Small-company growth. A fund that by prospectus or portfolio practice limits its investments on the basis of size of the company.

GI -- Growth and income. A fund that combines a growth-of-earnings orientation and an income requirement for level dividends, rising dividends or both.

EI -- Equity income. A fund that seeks relatively high current income and growth of income through investing 60 percent or more of its money in equities.

H -- Health/biotechnology. A fund that puts 65 percent or more of its money in shares of companies engaged in health care, medicine and biotechnology.

NR -- Natural resources. A fund that invests more than 65 percent of its capital in natural-resources stocks.

EN -- Environmental. A fund that makes at least 65 percent of its investments in securities of companies involved in waste management, pollution control and other products and services related to providing cleaner and healthier environmental conditions.

TK -- Science and technology. A fund that is at least 65 percent invested in science and technology stocks.

S -- Specialty and miscellaneous. A fund that limits its investments to a specific industry, e.g. banks or real estate, or a fund that has not been classified with an existing investment objective.

UT -- Utility. A fund that is at least 65 percent invested in utility shares.

XTC FS -- Financial services. A fund that is at least 65 percent invested in securities of financial-services companies, including banks, finance companies, insurance and brokerage firms.

RE -- Real estate. A fund that invests at least 65 percent of its money in securities of domestic and foreign companies in the real estate industry.

OI -- Option income. A fund that writes covered options on at least 50 percent of its portfolio. Options are contracts to buy or sell a certain number of shares of stock by a certain date for a specified price. They are widely traded on several investment exchanges. For a fee, the owner of stock can agree to make shares available for the execution of one of these options con tracts. The owner might have to sell the stock at an unfavorable price if the contract is executed, but most contracts aren't, leaving the writers of such options with a valuable source of fee income -- assuming they know what they're doing. If you still can't fathom what all this is about, this type of fund is probably not for you.

GL -- Global. A fund that invests at least 25 percent of its money in securities traded outside the United States. Such a fund might own U.S. securities.

IF -- International. A fund that invests in securities whose primary trading markets are outside the United States.

EU -- European region. A fund that concentrates in securities whose primary trading market or operations are in Europe or in a single European country.

PC -- Pacific region. A fund that concentrates on securities whose primary trading market or operations are in the western Pacific area or a country within that area.

AU -- Gold-oriented. A fund that has at least 65 percent of its money in shares of gold mines, gold-oriented mining-finance houses, gold coins or bullion.

CV -- Convertible securities. A fund that invests primarily in convertible bonds and convertible preferred shares.

FX -- Flexible portfolio. A fund that allocates investments across various types of assets, including domestic common stocks, bonds and money market instruments, with a focus on total return.

GX -- Global flexible portfolio. A fund that allocates investments across various types of assets, including both domestic and foreign common stocks, bonds and money market instruments, with a focus on total return. At least 25 percent of its portfolio is securities traded outside the United States, including holdings of gold and gold-related securities.

B -- Balanced. A fund whose primary objective is to conserve principal by maintaining a balanced portfolio of stocks and bonds. Typically, the ratio of stocks to bonds is about 60-40.

MI -- Mixed Income. A fund that seeks to optimize income through investing in dividend-paying stocks, bonds and money market instruments, with some emphasis on net asset value protection.

I -- Income. A fund that usually seeks high income and has a maximum fixed-income commitment of 75 percent of the portfolio, a maximum equity exposure of 60 percent or both.

WI -- World income. A fund that invests its portfolio primarily in U.S. dollar and non-U.S. dollar debt instruments. The fund also might invest in common and preferred stocks.

FI -- Fixed income. A fund that usually has more than 75 percent of its assets in a combination of fixed-income issues, including money market instruments, bonds and preferred stocks.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.