When investment firms follow global standards for presenting investment performance, it gives investors the transparency they need to compare and evaluate investment managers.
The Global Investment Performance Standards (GIPS) is a set of standardized, industry-wide ethical principles that guide investment firms on how to calculate and present their investment results to prospective clients.
Who Should Adopt GIPS Standards?
- Investment firms
- Investment managers
Why Adopt GIPS Standards?
The GIPS standards
- Are a rigorous set of investment performance measurement standards adopted in 37 countries and recognized globally.
- Enable investors to directly compare one firm’s track record with another firm's record.
- Include composite presentation, improving transparency by eliminating survivorship biases, misrepresentations and historical data omissions.
- Evolve to address issues that arise in a dynamic investment industry.
- Incentive firms to invest significant time and resources into internal risk-control mechanisms and setting performance benchmarks — the hallmarks of reliable long-term success. (To claim compliance, an investment firm must demonstrate adherence to comprehensive rules governing input data, calculation methodology, composite construction, disclosures, and presentation and reporting.)
How Can I Learn More About GIPS Standards?