CFA Institute Seeks Industry Input on 2020 Global Investment Performance Standards Exposure Draft

CFA Institute, the global association of investment management professionals, has released the 2020 Global Investment Performance Standards Exposure Draft (PDF) and 2020 GIPS Standards for Verifiers Exposure Draft (PDF) for public review and comment by 31 December. This marks an important milestone in the evolution of the Global Investment Performance Standards (GIPS®) and in ensuring their relevance for all asset classes and types of investment managers.

The GIPS standards are a set of standardized, industry-wide ethical principles that guide investment managers on how to fairly calculate and present their investment results. When investment firms and asset owners follow global standards for presenting investment performance, it provides investors and oversight boards the transparency they need to evaluate the investment manager.

“Though the majority of the top asset managers in the world claim compliance with the GIPS standards for all or a part of their business, adoption has lagged among managers of alternative investment strategies and pooled funds, and asset owners. They need performance standards that are highly relevant and make it easier for them to comply,” said Karyn Vincent, CFA, CIPM, head of global industry standards at CFA Institute. “Investment products have evolved and the industry is dynamic, and an updated set of performance standards will address that new landscape. We invite the public to help shape the GIPS standards of tomorrow.”

In May 2017, CFA Institute released a consultation paper for public comment, which helped inform the creation of the 2020 GIPS Standards Exposure Draft. The draft has streamlined the requirements, and added new guidance to make it more relevant for alternative investments and private wealth firms. Highlights of the 2020 GIPS Standard Exposure Draft include:

• A new structure that aims to reduce complexity and simplify preparation of GIPS reports
• Tailored guidance for asset owners
• New options for reporting pooled fund performance versus composite performance
• Ability to allocate cash to carve-out segments
• More flexibility for using money-weighted returns versus time-weighted returns
• New voluntary advertising guidelines for broad distribution pooled funds

Feedback on the 2020 GIPS Standards Exposure Draft may be submitted through 31 December to [email protected]. CFA Institute is planning adoption of the revised GIPS standards for mid-2019 with an effective date of 1 January 2020. Visit www.gipsstandards.org to learn more about the update, how the proposed changes will affect firms and asset owners, and view input and comments to date.