Lipper sets sights on Canada

Date: Monday, July 17, 2006
Author: Mark Brown, Advisor.ca

On the surface, a press release issued jointly by the Canadian Investment Funds Standards Committee and Lipper on July 5th that detailed a partnership to better decode the Canadian mutual fund industry seemed simple enough, but on closer inspection its clear the partnership is being used by one of the largest fund rating companies in the U.S. as springboard into Canada.

It was an important announcement for Lipper, which delayed the release a day so it wouldn't be missed over the American Fourth of July celebrations.

n June Lipper's head of North American research, Jed McKnight, was in Toronto with a member of the company's sales team to show off their wares to potential clients. With little fanfare, the fund rating company has already launched a Canadian version of Hindsight, its Windows-based fund performance desktop tool company marketing and performance analysis departments for analyzing funds in a number of markets, similar to Morningstar's PALtrack.

Later this month the Reuters' subsidiary will roll out its Lipper Leader rating system and within the next week or two it will have all of the CIFSC classifications implemented in its products. Morningstar pulled out of CIFSC in February and is developing its own system of fund categorization.

Lipper enters a competitive space in Canada for fund ratings that has been largely sewn up by Morningstar and, to a lesser extent, by the Globe and Mail's GlobeFund. But so far Lipper has not had too much trouble finding interested parties. As McKnight notes, client reception has been very warm, which is good enough to warrant additional trips for Lipper's sales team north to sell the product to Canada.

This is not Lipper's first push into Canada. In early 2003 the company tried to make inroads, but was forced change its strategic plan at the eleventh-hour to concentrate on its expansion in Europe, says McKnight. "It was matter of other priorities that came up," he explains. "We had to pull-back and focus on other things before moving into the Canadian market full force."

"As I understand it, they were looking at expanding beyond the U.S. and thought about Canada, but they made a shift to Europe and so their involvement in Canada really dwindled and they didn't see any value to participating with us," says Ralf Hensel, CIFSC chair, on Lipper's false start in Canada. "Now they've come back and they've launched a new product."

Like last time, Lipper sees the CIFSC as a launching point into Canada. But things are different this time around. Three years ago it was kicked out of the organization for lack of participation after it failed to attend a single meeting. Lipper has improved that record, with McKnight representing his company at the most recently concluded committee meeting at the end of June.