A significant change is planned for the Global Investment Performance Standards (GIPS) in 2020, the newest version of the Standards is coming, and we felt that organizing key information into a single, easily digestible guide, would help those that these changes will impact better understand what’s occurring
The guide will be issued in three parts (and perhaps a fourth):
To put it simply, anyone who works with, complies with, or is thinking of complying with GIPS standards can benefit from reading this guide. Those who are most effected by the proposed changes are firms and institutions who claim, or plan to claim, compliance. But even consultants, verifiers, and other industry participants who are aware of and care about these Standards will want to take the time to study this guide.
A Brief History
The Global Investment Performance Standards is a set of rules that specify how to present past performance to prospective clients or to key stakeholders. They were developed partly to avoid countries developing their own standards. They create, in a sense, a “level playing field” for asset managers to compete globally.
As mentioned in Chapter 1, there have been two revisions to the original 1999 edition of GIPS (in 2005 and 2010). There was an expectation that the Standards would be reviewed every five years for possible revision. No changes were made in 2015, but many are planned for 2020.
While the CFA Institute “owns” the GIPS standards, they have created an Executive Committee (EC), as well as several subcommittees, to administer the Standards.
In the past it was common for the exposure draft to be provided in a red-lined format, so that readers could more easily see what wording has been changed, added, or removed. In the case of the GIPS 2020 Exposure Draft, this wasn’t a good idea, given the massive amount of changes that are being made.
As noted in Chapter 4, the organization of the Standards has changed dramatically, with the segregation of rules into three major areas:
∙traditional separate accounts
We won’t go over all of our thoughts on what is being proposed, as our comment letter is available on line. Rather, we’ll touch on some of the more significant items.
We recommend that you download a copy of the Exposure Draft.
Please review it. It’s long, so perhaps focus on those parts that are most germane to you and your firm.
Please submit your comments to firstname.lastname@example.org.
The initial exposure draft was issued just before its deadline of August 31, 2018. The verification exposure draft, which we will discuss in Part II, was issued just before its deadline of October 31, 2018.