Investor's fortune and the role of lipper in determining unit trusts performance differential

• Main Authors: Ahmad Ridhuwan Abdullah, Mohd Zulkifli Muhammad, Zakiah Hassan, Siti Salwani Abdullah, Razman Hafifi Redzuan
• Format: Conference or Workshop Item
• Language: English
• Published: 2013
• Online Access: http://discol.umk.edu.my/id/eprint/9064/1/Conference%203.pdf; http://discol.umk.edu.my/id/eprint/9064/
• Institution: Universiti Malaysia Kelantan

This study examines the ability of Lipper ratings in dif erentiating and segregating unit trust funds from the lowest performer to the highest performer category. A sample of 68 Malaysian unit trusts from December 2000 to November 2010 were selected and analysed. Using the Jensen’s alpha and Fama-French 3-factor model, this study provides evidence on performance dif erential between funds in each rating categories. The result shows that the highest rated funds, second to highest and third to highest significantly outperformed the lowest rated funds especially in a longer investment period. This result indicates that Lipper rating system is able and useful in identifying the lowest to highest performance funds.