GIPS® Standards Do’s and Don’ts First Quarter 2019 is almost half over. Now is a great time for an in-depth review and refresh of firm-wide GIPS standards policies and procedures, especially for firms on an annual verification cycle. Here’s a list of Do’s and Don’ts to help with those P&P reviews and final polishing of GIPS Composite Reports. DO DON’T […]
About Kim Cash
This author has yet to write their bio.Meanwhile lets just say that we are proud Kim Cash contributed a whooping 8 entries.
Entries by Kim Cash
Beyond “Don’t Use” – How (Not) to Calculate Money-Weighted Returns in Excel
If cost was of no matter, then asset managers would all own (fill in the blank with your favorite accounting system). For emerging asset management firms, cost does matter. When managing a start-up commingled fund, an investment firm only needs to calculate a single return stream to comply with best practices in the GIPS® standards. It’s hard to justify a six-figure expense when Microsoft Excel is free, never mind the pitfalls.
In the 2020 GIPS Exposure Draft, provision 3.A.10 is a revision of 3.A.7 that incorporates the term “client-directed” from the GIPS handbook. It prohibits composite membership changes unless there is a composite redefinition or a documented “client-directed” change to a portfolio’s investment mandate, objective, or strategy.
This provision ensures an asset manager’s decisions are reflected in the composite’s performance, providing accountability for tactical decisions or style drift over time.
The roll-out of 2020 GIPS® is underway and currently open for comment. One of the more confusing provisions in the exposure draft is the proposed requirement to report Advisory Only Assets separate from GIPS Firm assets.
This 2020 GIPS provision is not a big departure from prior guidance. It is important, however, to understand if you and your colleagues—and regulators—use the term “advisory only” assets differently than it is used in the 2020 GIPS Glossary. This article will define the terminology and help you assess the impact of the new terminology for your firm, if any. We’ll also line up the GIPS terminology with regulatory assets under management and provide clarifying examples.
I’ve been helping firms become GIPS compliant and have been running marathons for over 20 years, and last month, I just ran my fastest half marathon ever. The marathon was an inaugural Mt. Hood Revel run, and my husband was getting texts during the event tracking my bib number:
“One quarter done with a pace of 8:05 min/mile. Projected finish time of 3:33:26.41 at 9:05AM.”