Q: What are the GIPS Standards?

A: The GIPS standards are a set of standardized, industry-wide ethical principles for calculating and presenting investment performance that investment management firms can voluntarily elect to adhere to. The GIPS standards are based on the fundamental principles of full disclosure and fair representation of investment performance results. The GIPS standards were created and are sponsored by CFA Institute through the collaboration of the global investment community. Global standardization of investment performance reporting gives investors around the world the additional transparency necessary to compare and evaluate investment managers. Among other things, firms that comply with the GIPS standards are required to implement consistent policies and procedures related to the calculation of performance results, to create standardized performance presentation materials (referred to as GIPS Composite Reports), and to establish processes for delivering those materials to all of the firm’s prospective clients and investors.

Q: Why would a firm claim compliance with the GIPS standards?

A: There are many reasons why a firm would choose to comply with the GIPS standards, including:

  • A desire to follow best practices
  • To improve internal controls and implement consistent processes
  • To ease comparability with other investment managers
  • Pressure from clients, prospects, and consultants

Additionally, though compliance with the GIPS standards is not mandated by law or regulation, it is generally expected in many markets. Compliance with the GIPS standards has become a de facto requirement for investment management firms to win new mandates, especially those that serve the institutional marketplace. Non-compliance can lead to lost business opportunities, lost revenue, constrained growth, and possible increased scrutiny from regulators.

Q: What is verification and does Guardian offer verification?

A: Verification is the process by which an independent third-party verification firm (verifier) conducts testing of a firm on a firm-wide basis in accordance with the required verification procedures of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund 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. Verification does not provide assurance on the accuracy of any specific performance report.

Firms that claim compliance with the GIPS standards may choose to have an independent third-party verification. Verification is not required in order to claim compliance, though the value of verification is widely recognized and being verified is considered to be best practice.

Guardian does not offer verification, which frees us from independence concerns and allows us to take a hands‐on approach to developing, implementing and managing the GIPS compliance process.

For more information, click here

Q: What is the CIPM designation?

A: The Certificate in Investment Performance Measurement (CIPM) designation is the investment industry’s only credential dedicated to investment performance analysis and presentation.

For more information, click here