Market Integrity Insights January 2021
AIA’s Journey to GIPS® Compliance
A case study in future-proofing investment operations
For AIA, the journey to Global Investment Performance Standards (GIPS®) compliance has been as important as the achievement.
AIA’s Journey to GIPS® ComplianceRead the full report (PDF)
Why might an asset owner choose to comply with the Global Investment Performance Standards (GIPS®)? The extra effort is worth it when considering the many benefits, which include improved investment outcomes, scalable data, easier conversations with management, and improved regulator and investor trust. A significant benefit also can be realised in being able to compare internally managed assets with assets managed by external managers in a standardised way.
Three years ago, after AIA Group CIO Mark Konyn initiated a project to improve practices across both its external managers and internal investment teams, Insurer AIA Group set off along the road to implement the CFA Institute GIPS standards. In this process, AIA became the first asset owner in Asia Pacific to adopt the GIPS standards. Additionally, AIA used this process as the catalyst to make sweeping changes that have modernized its operations, improved its investment outcomes, and added robust governance to support its balance sheet.
According to Konyn, the value of compliance is not only in being able to tick the box but also in revealing new ways of doing things. What started merely as an exercise to become compliant has resulted in a more efficient process that embeds the performance standards deeply into the operational, investment, and governance infrastructure. It has become the means, rather than the end, making compliance part of “who we are and what we do.”
AIA now uses the GIPS standards to harmonise reporting across the 18 markets in which it operates and across its external managers. The result is consistent, credible data that inform investment decision making and can be scaled to meet a number of other evolving reporting needs. This effort is supported by a culture of best practices and efficiency in internal processes that reduces administration and positions AIA for business growth in a changing regulatory landscape. As a listed firm with global investors, living and breathing global best practices has improved investor relations, too.
Managers competing for mandates from AIA will need to use GIPS-compliant methodology and governance. Konyn sees this as a positive move for the Asian investment industry in helping to drive best practices. He advises other asset owners to, “Just do it. When we started this, I believed the end goal would be worth it, but we didn’t realise how valuable the process would be in helping us transform. The results have gone far beyond our expectations.”