What are the GIPS^® standards?

The Global Investment Performance Standards, or GIPS^® standards, are a rigorous set of investment performance measurement standards utilized worldwide and recognized for their credibility, integrity, scope, and uniformity. To claim compliance with the standards, an investment firm must demonstrate adherence to comprehensive and rigorous rules governing data input, calculation methodology, composite construction, disclosures, presentation, and reporting.

Why are the GIPS^® standards important to investors?

The thoroughness of the GIPS^® standards gives investors the transparency they need to compare and evaluate investment managers worldwide. The standards were designed to provide a set of ethical principles that establish a standardized, industry-wide approach for investment firms to follow in calculating and presenting their historical performance.  GIPS^®-compliant firms aim to avoid misrepresentations of performance and strive to communicate all relevant information that prospective clients should know in order to evaluate past results. This gives investors a greater level of confidence in the integrity of performance presentations, as well as the general practices of GIPS^®-compliant firms.

What is GIPS^® Standards Verification?

GIPS^® standards verification is a voluntary process that demonstrates commitment to the fundamental principles of full disclosure and fair representation of performance results. During a verification, an independent third-party assesses whether a firm’s policies and procedures related to composite maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS^® standards and have been implemented on a firm-wide basis.

In claiming compliance with the GIPS^® standards, a firm represents that it:

• Adheres to several core principles, including properly defining the firm, adhering to applicable laws and regulations, and ensuring that information presented is not false or misleading.
• Uses input data consistently to calculate performance and uses certain calculation methodologies to facilitate comparability.
• Creates and maintains meaningful composites, which are defined as an aggregation of one or more portfolios managed according to a similar investment mandate, objective, or strategy.
• Creates GIPS^® Reports based on the requirements in the GIPS^® standards for presenting and disclosing investment performance and provides appropriate GIPS^® Reports to all prospective clients and prospective pooled fund investors.