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USAA Investments Snags Prestigious Lipper Award, Again

by Community Manager

‎03-20-2014 04:15 PM

For the second time in a decade, USAA Investment Management Company’s fixed income group has won one of the most coveted investment awards in the business.  Matt Freund, USAA Mutual Funds’ chief investment officer, explains why USAA mutual funds are a cut above the rest.


Matt FreundBy Matt Freund,
Chief Investment Officer, USAA Mutual Funds


Since 1970 when USAA Investments was founded, we’ve stayed focused on what matters most: Helping investors reach their investment goals while delivering quality service, excellence in financial performance and integrity in money management. 


That’s why I’m proud, but not surprised, to tell you that USAA Investments has won one of the most prestigious accolades in the industry: The Lipper Fund Award.


For those of you who don’t know, the annual Lipper Awards are a respected honor given to mutual funds and fund families that have excelled in delivering strong risk-adjusted performance, relative to their peers.


At USAA Investments we’ve done just that. Lipper named USAA the Best Fixed Income Large Fund Group for 2014. This award is presented annually to the mutual fund family whose fixed-income funds generated the highest rating for relative risk-adjusted return over the three-year period ended December 31, 2013.


That’s not all. It’s hard enough to win the Lipper Award once, but Lipper presented us this very same award back in 2004. That means that our funds’ excellence identified by Lipper really started in the early 2000s and has continued up until today. This repeat performance is rare. It’s also humbling.


So what’s the secret behind our legacy of success at USAA Investments?


The principles that have earned us recognition from Lipper are the same bedrock beliefs that have guided USAA funds for decades. We like to call them the three “Ps”: People, philosophy and process.




Lipper-Blog-image.pngAt USAA Investments we have a tradition of attracting the best of the best. Our people are intelligent, curious and hardworking. They’re also independent thinkers who aren’t afraid to challenge the status quo.


Also, our ranks have a habit of sticking around, and that’s the way we like it. The average employee at USAA Investments has been with the company for more than 20 years, and I am living proof of this. This August, I’ll celebrate 20 years with USAA. It’s gratifying to me that a number of people that I hired more than 10 years ago are still with us today. 


This tenured team means that we operate a very tight ship. We readily share information among departments and we challenge each other on investment ideas. Also, we’re not afraid to call out each other’s mistakes. We actually encourage this on our team so that we can attempt to identify mistakes before the unforgiving capital markets do. 




Our philosophy also sets us apart. We believe in taking risk where it makes sense and want the return of investment on the funds to reflect these risks. That means we’re willing to go anywhere to seek the investment values that others might overlook. We’re also willing to skip investments that the crowd deems trendy.


For example, USAA is one of the few institutions in the country that prior to the crisis had no subprime exposure. That was deliberate. Our investment team had discovered that these structures were simply too complex to justify the risk. 


We also believe in focusing on long-term performance over years, rather than fixating on fluctuations over weeks or months. This helps us keep a steady, disciplined hand as we manage our clients’ hard-earned money.




Finally, the third “P”:  Process. We have a very rigorous, disciplined and repeatable investment process. We utilize a team approach that allows us to leverage our expertise wherever we go. Before ever making an investment we consult our deep bench of credit analysts who have an exhaustive understanding of the securities, structures and companies behind our investments.


One last note. We know how important it is for hardworking Americans to focus not just on what they earn, but also on what they keep. That’s why I’m proud to say that the overwhelming majority of our funds have expenses below the Lipper averages. That means our yields – what we pay out to investors – are generally near the top of their peer groups. 


Winning the Lipper Award means so much to me, and to all of us at USAA. Ultimately, it means that we’ve done right by our members. At USAA we’re always trying to do what’s right, and leaving more money in our members’ pockets is the right thing to do.




Mutual fund operating expenses apply and continue throughout the life of the fund


Past performance is no guarantee of future results. 


Some USAA mutual funds have expense offset and performance fee adjustments and/or voluntary reimbursements that affect their operating expenses.


The Lipper rankings are calculated by Lipper Inc., a Reuters Company, which is a nationally recognized organization that compares the performance of mutual funds within a universe of funds having similar investment objectives. Rankings are based on total return performance:  with capital gains and dividends reinvested, with annual operating expenses deducted, but without including front-end or back-end sales charges. Rankings are relative to a peer group and do not necessarily mean that the fund had high total returns.


Lipper’s Large Company universe is currently comprised of fund families with more than $51 billion in total net assets. Only fund families with at least five bond funds were eligible. Risk-adjusted returns are calculated with dividends reinvested and without sales charges. Past performance does not guarantee future results. The individual funds may not have ranked number one in their categories.


The ratings are subject to change every month and are based on an equal-weighted average of percentile ranks for each metric over three-, five-, and ten-year periods (if applicable). The highest 20% of funds in each peer group are named Lipper Leader, or a score of 5, the next 20% receive a score of 4, the middle 20% are scored 3, the next 20% are scored 2, and the lowest 20% are scored 1. Lipper ratings are relative, rather than absolute, measures, and funds named Lipper Leaders may still experience losses periodically; those losses may be larger for equity and mixed equity funds than for fixed income funds. Lipper ratings are not intended to predict future results, and Lipper does not guarantee the accuracy of this information. More information is available at Thomson Reuters Copyright 2013, All Rights Reserved.

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