Timeline Revisions for GIPS® 2020

April 18, 2018 by  
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On April 18, 2018, CFA Institute announced some significant developments related to the timeline for GIPS 2020, the next edition of the GIPS standards, as well as the status of several guidance statements that are currently pending adoption.

First, it was announced that the development of GIPS 2020 is on schedule and a list of significant upcoming dates was provided:

  • August 31, 2018 – the GIPS 2020 Exposure Draft is expected to be issued for public comment, excluding the section on verification.
  • October 31, 2018 – an exposure draft of the verification section of GIPS 2020 will be issued separately for public comment.
  • December 31, 2018 – both comment periods will close.
  • June 30, 2019 – the final version of GIPS 2020 is expected to be adopted and released.
  • January 1, 2020 – GIPS 2020 will become effective. Any new requirements will need to be implemented by GIPS-compliant firms and incorporated into any firm materials that include performance results for periods beginning on or after January 1, 2020.

Additionally, it was announced that all guidance statements that have been issued for public comment but that have yet to be formally adopted and/or made effective will be delayed until following the completion of the GIPS 2020 project. These include:

  • Guidance Statement on Broadly Distributed Pooled Funds
  • Guidance Statement on Overlay Strategies
  • Guidance Statement on Risk
  • Guidance Statement on Benchmarks
  • Guidance Statement on Supplemental Information
  • Guidance Statement on Verifier Independence

The delayed adoption of these guidance statements should not be interpreted as implying that the proposed changes that they address will be discarded. Rather, the key concepts addressed in the proposed guidance statements will be incorporated into the GIPS 2020 exposure draft. The GIPS 2020 development process is then, in turn, expected to introduce new concepts that will feed back into the final versions of the guidance statements, which will be adopted following the completion of GIPS 2020.

For more information, please see the notice published on the GIPS standards website: https://www.gipsstandards.org/news/Documents/april2018.pdf

CalPERS Adopts GIPS standards

March 12, 2018 by  
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CalPERS Adopts the GIPS standards

It was recently announced that the California Public Employees’ Retirement System (CalPERS) adopted the GIPS standards. Adhering to the GIPS standards is a voluntary commitment and considered industry best practice for investment performance calculation and presentation. As one of the largest pension plans in the U.S., CalPERS saw benefit in applying the GIPS standards to their own performance reporting processes despite not having the marketing incentives that often drive traditional investment managers to claim compliance. Though pension plans like CalPERS do not have clients in the traditional sense, they do have stakeholders that they report investment performance to. By adopting the GIPS standards, CalPERS is making a commitment to provide those stakeholders with performance information that adheres to industry accepted standards. The GIPS requirements for asset owners include documenting policies and procedures that establish how the GIPS standards are applied and compliance is maintained, including policies on performance calculation, treatment of fees, valuation principles, error correction and performance presentation. It is anticipated that by CalPERS taking on this initiative that other asset owners will follow as will advisers who manage pension plan assets.

How many firms comply with GIPS standards?

February 26, 2018 by  
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More Than 1,650 Firms Now Claim GIPS Compliance

Firms that comply with the GIPS standards are required to report to the CFA Institute annually, which allows CFA Institute the ability to track the number of firms that are currently claiming compliance. In an increase from last year, 1,653 firms now claim compliance with the GIPS standards. Of those firms, 1,440 opted to undergo an independent GIPS verification. Compliant firms also have the option to have their name listed on the GIPS website. Currently, 90% of the firms that claim compliance elect to have the name of their firm listed on the GIPS website to publicly display their commitment to industry best practices for performance presentation.

GIPS Pooled Fund Guidance Delayed

November 22, 2017 by  
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Effective Date Delayed for GS on Broadly Distributed Pooled Funds

The GIPS Executive Committee has decided to delay the effective date of the Guidance Statement on Broadly Distributed Pooled Funds. The Guidance Statement was scheduled to become effective on January 1, 2018, but the effective date has now been pushed back to January 1, 2020 in order to coincide with the anticipated effective date of the 2020 edition of the GIPS standards (GIPS 20/20). Firms should not interpret this delay as an indication that the guidance is expected to change in any way and firms are still strongly encouraged to adopt the guidance in advance of the effective date.

GIPS 20/20 Update

September 22, 2017 by  
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The 21st Annual Global Investment Performance Standards (GIPS®) Conference was held in San Diego, California, on September 14-15, 2017. A significant focus at the conference was on GIPS 20/20, the next version of the GIPS standards that is currently in development. Two sessions were dedicated to the topic — one focusing on pooled funds and the other on composites — and the underlying themes of GIPS 20/20 ran through many of the other presentations as well. In addition, during the GIPS Executive Committee Open Meeting that preceded the conference, an update was provided on the feedback received from the GIPS 20/20 consultative paper.

While very little has been finalized so far, a clear direction on where the Standards are going is beginning to take shape. For firms that currently claim compliance and only manage separate accounts, the expectation at this point is that the impact should be quite minimal. Where the most significant changes are occurring are related to pooled funds, both broadly distributed and privately offered.

A suggestion being offered is that firms managing pooled funds may no longer be required to include them in composites. Firms would still have the option of including them if desired, but would no longer be obligated to include them in composites — similar to the current treatment for non-fee-paying accounts. For many firms, this would eliminate the need for a vast number of single account composites. Note, however, that the proposal is not expected to carry over to unique separate account mandates — if a separate account does not fit into one of the firm’s existing composites, it would still require the creation of a new composite.

The flipside of granting this new level of flexibility on the composite side is that new fund-specific requirements are expected to be implemented. Specifically, it is being suggested that compliant firms would need to maintain a complete list of funds that are managed by the firm — similar to the currently required list of composite descriptions — and make this list available to prospective fund investors. In addition, prospective investors for directly marketed products (i.e., funds that are not broadly distributed) will need to be provided with what is being referred to as a “GIPS Fund Report.” The specific content of this report has not yet been determined, but it is expected to be a streamlined, fund-specific version of a GIPS-compliant composite presentation.

An update on the timeline for GIPS 20/20 was also offered. An exposure draft is expected to be released to the public by the end of second quarter 2018 for an approximately four-month comment period. Following revisions based on the public comments, the goal is to have the final version approved and adopted by the GIPS Executive Committee by the end of secondary quarter 2019, with an effective date of January 1, 2020.

Revised Guidance for Presenting Supplemental Information

December 12, 2016 by  
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Revised Guidance for Presenting Supplemental Information –  Public Comment Period Open

The revised Guidance Statement on the Use of Supplemental Information exposure draft has been released for public comment. This revised guidance provides new and more detailed interpretation on the treatment of performance and performance-related information both within and outside of a GIPS-compliant presentation. You can send your comments and feedback via email to standards@cfainstitute.org; the public comment period is open until 28 February 2017.

CFA Institute GIPS Notification Form Updated

March 24, 2016 by  
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The revised GIPS Compliance Form for notifying CFA Institute when firms claim compliance with the GIPS standards is now available. This update reflects the continuation of the requirement initiated in 2015. The form needs to be submitted to CFA Institute by all firms that claim compliance with the GIPS standards by June 30, 2016.  Keep in mind that if your firm completed the form last year, that does not fulfill your obligation for 2016.  Submitting the form is now an ongoing annual requirement in order to maintain compliance with the GIPS standards.

Following is a summary of the changes that were made to the form.

Additions/Modifications:

  • In the “Primary Contact” section, a new question was added stating that CFA Institute “would like to support your firm’s ongoing success” and asking whether they can contact you.  It expects a simple “yes” or “no” response, but it is a required element of the form.
  • Under the “Firm Information” section, there is a new question asking for the submission of the organization’s GIPS firm definition.  A text box is provided so that the specific language used by the firm can be provided.  This question is optional.
  • In the “Firm Type and Structure” section, there are additional geography related questions.  The first question asks where your firm operates. The firm can check a box indicating that the firm is “global” or can specify selected countries and regions from an extensive list of over 200 options. The form then asks if CFA Institute can display the locations where the firm operates on the GIPS website.  This is a required “yes” or “no” question.
  • Under the “Firm Assets and Investment Vehicles” section, the question related to firm’s GIPS Total Firm Assets is worded in the same manner as last year, but the drop down list with asset ranges to select from has been modified to be less granular at the lower range of assets but more granular on the higher end.

The full form is available at http://www.gipsstandards.org/compliance/Pages/compliance.aspx.

Lastly, the CFA Institute released summary statistics related to the findings from the information submitted last year. You can read about this at:  http://cfa.is/1UMQ0XF