- TO obtain global acceptance of calculation and presentation standards in a fair, comparable format with full disclosure.
- To ensure consistent, accurate investment performance data in ares of reporting, records, marketing, and presentations.
- To promote fair competition among investment management firms in all markets without unnecessary entry barriers for new firms.
- To promote global "self regulation."
Characteristics of GIPS:
- To claim compliance, an investment management firm must define its "firm."
- GIPS are ethical standards for performance presentation which ensure fair representation of results and full disclosure.
- Include all actual fee-paying, discretionary portfolios in composites for a minimum of 5 years or since firm or composite inception.
- Firms are required to use certain calculation and presentation standards and make specific disclosures.
- Input data must be accurate.
- GIPS contain both required and recommended provision-firms are encouraged to adopt the recommended provisions.
- firms are encouraged to present all pertinent additional and supplemental information.
- There will be no partial compliance and only full compliance can be claimed.
- Follow the local laws for cases in which a local or country-specific law or regulation conflicts with GIPS, but disclose the conflict.
- Certain "recommendations" may become "requirements" in the future.
- Supplemental "private equity" and "real estate" provisions, contained in GIPS, are to be applied to those asset classes.
8 Major Sections of the GIPS Standards
- Fundamentals of Compliance
- Input Data
- Calculation Methodology
- Composite Construction
- Disclosures
- Presentation and Reporting
- Real Estate
- Private Equity
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