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A 2020 GIPS Standards Game-Plan

First-Steps for Segregated Account Managers

Firms managing segregated accounts who claim compliance with the GIPS standards – and firms who currently include pooled funds in composites, present TWRs, and expect to continue doing that: this article is for you

Since the major rewrite of the GIPS standards was first announced, the focus has been on updates to make the GIPS standards more relevant to different types of discretionary asset managers.  For firms already claiming compliance, especially managers of segregated accounts, changes were expected to be minor… and they are.

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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.

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