Performance Perspectives Blog

Do I have to???

by | Nov 19, 2010

I got a call from another verifier who was wondering if GIPS(R) (Global Investment Performance Standards) 2010 requires firms that object to the use of annualized standard deviation to still show this measure, even though they have (a) documented why standard deviation doesn’t apply and (b) provided a substitute. And the answer is (drum roll, please)….yes.

I objected to this new requirement, as did many others who commented on the “exposure draft,” but it remained. In addition, it requires firms that feel that standard deviation is a poor risk measure to employ for their composite’s strategy to explain why and provide the measure they feel IS appropriate; but it STILL requires firms to show the three-year annualized standard deviation.