Posts

Global Investment Performance Standards (GIPS®) For Marketers

With the finalization of 2020 performance, most marketing departments are completing their presentations.  We have compiled pertinent questions from the GIPS Annual Conference to help compliant firms create marketing materials that follow the latest GIPS standards updates.

Must the GIPS Report reference be on the Table of Contents for pitch books or can it be referenced on the performance pages at the beginning of the performance section?

A GIPS Report can be provided in a slide deck with other material and still meet the distribution requirement. What is new in 2020 is that firms are now required to indicate that a GIPS Report is included. According to the Handbook, the disclosure should be prominent and the GIPS standards suggest adding it to the Table of Contents. A firm can indicate the inclusion of a GIPS Reports in the table of contents or applicable page, such as in the footnote of a relevant composite/representative performance page.

Read more

GIPS® Verification Basics

GIPS Verification Basics

Attendees at this fall’s Annual GIPS Standards Conference submitted questions about verification and CFA Institute notification. We’ve answered 5 of those questions below.


Why would a GIPS-compliant firm want to be verified?


More than 1,700 firms currently claim compliance with the GIPS standards. Over 80% of these firms choose to have a verification conducted even though it is not required. Verification adds to the assurance that the standards are fully implemented on a firm-wide basis. Experienced verifiers have worked with hundreds of different types of composites and have tested policy manuals at dozens of firms. They have first-hand knowledge of what works and how to make workflows better. A verifier can provide suggestions on how to enhance the firm’s policies and procedures as well as test that they have been implemented. They also keep firms updated on changes and new interpretations, so the firm isn’t learning that they have been incorrectly claiming GIPS Compliance during a regulatory examination.

Read more

2020 GIPS® Standards Q&As

This is a comprehensive list of Q&A’s released as part of the GIPS standards Newsletter, organized by subject matter.  As CFA Institute continues to add Q&As through the GIPS Standards Newsletter, we will continue to update this page.

GIPS 2010 Transition to GIPS 2020

Pooled Funds

Composite Management/Policies

Input Data and Portfolio Calculation

Read more

Money-Weighted Returns in Excel

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). Read more

Multi-Asset Composite Membership Changes – GIPS® 2020

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.

Read more

Advisory Only Assets – Understanding New GIPS® Terminology

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.

Read more