By Michael Beck, CIPM, CFP, vice president at Glenmede
The Global Investment Performance Standards (GIPS®) have been in existence since 1999 and were revised in both 2005 and 2010. They are used to promote ethics and integrity in the financial services marketplace by having voluntary compliance by asset managers. There are currently 41 country sponsors of GIPS® worldwide, and the CFA Institute’s GIPS® executive committee is looking to revise and update the standards to help define the future of the standards.
Currently, 85 out of the top 100 asset managers claim compliance with the standards, which cover other areas in the industry such as pooled fund managers and alternative managers. One of the goals of the GIPS 20/20 update is to make the standards easier. This would allow additional types of managers to claim compliance with them. Another goal of 20/20 is to have universal adoption and recognition for the standards by asset owners, asset managers and regulators worldwide.
One of the major changes of the 20/20 vision is to have three pillars for each area of the marketplace.
The first would be “one to one” which would typically be considered an institutional money manager where composite performance is shown.
The second pillar would be “one to many,” which would be used by pooled fund managers or mutual fund managers.
The final pillar would be “one to none,” which would be used by assets owners that have no prospective clients such as a large pension fund or sovereign wealth fund.
To allow the industry to weigh in on these proposed changes there was a GIPS® 20/20 consultation paper, released in the summer of 2017. The outreach for public comment yielded approximately 60 letters sent to the CFA Institute from individuals, asset managers, verifiers, and other industry groups. Letters and other feedback are being solicited for the GIPS® 20/20 exposure draft, which is expected in early 2018.
GIPS® is a registered trademark of the CFA Institute.
The comment letters received can be viewed here.
To meet Michael Beck and learn more about this subject, please attend FTF’s PMA 2018 conference, March 8-9, in NYC.