Chapter 3: Overview of the Global Investment Performance Standards (GIPS)

In this section

• Objectives, Scope, and Benefits of the GIPS Standards
  Explore how the GIPS Standards unify performance measurement and bolster transparency, comparability, and credibility for investment managers and investors worldwide.
• Fundamentals of Compliance: Defining the Firm and Discretion
  Explore GIPS compliance fundamentals with an in-depth discussion of firm definition and discretion, highlighting practical examples that clarify consistency, transparency, and accuracy in performance reporting.
• Return Calculation Methodologies (External Cash Flows, Fees, Expenses)
  Explore how GIPS defines standardized methods for calculating returns, addressing external cash flows and fee structures for consistent, comparable performance presentation.
• The GIPS Valuation Hierarchy
  Explore the significance of fair value measurements under GIPS, the three-level hierarchy of inputs, and practical approaches for compliance in performance reporting.
• Asset-Weighting Methods for Composite Return Calculations
  Discover the significance and methods of asset weighting in GIPS-compliant composite return calculations, focusing on beginning-of-period weighting, daily weighting for large flows, and best practices for accurate performance measurement.
• The Meaning of “Discretionary” in Composite Construction
  Explore the definition and significance of discretionary portfolios in GIPS-compliant composite construction, the role of client-imposed constraints, and how managers can correctly identify a portfolio’s strategy alignment to avoid selection bias.
• Role of Mandates, Objectives, and Strategies in Composite Design
  Explore how mandates, objectives, and strategies drive composite construction under GIPS, ensuring consistent, transparent performance reporting.
• Requirements for Including, Excluding, or Switching Portfolios Among Composites
  Discover the crucial GIPS rules for adding new portfolios, excluding terminated portfolios, and switching between composites, with real-world examples and best practices.
• GIPS Requirements for Performance Presentation and Reporting
  Learn how to structure and present performance under GIPS requirements, including mandatory disclosures, timelines, and fee presentation considerations.
• Linking Past Performance from Prior Firms or Affiliations
  Learn GIPS requirements for preserving historical performance records during organizational transitions, such as mergers & acquisitions, to ensure compliance and maintain continuity.
• GIPS Verification: Purpose, Scope, and Process
  Learn how GIPS verification boosts the credibility and reliability of your firm’s performance reporting through independent third-party reviews, firm-wide assessments, and a multi-stage audit process.
• GIPS for Alternative Investments, Real Estate, and Private Equity
  Explore specialized GIPS standards for alternative investments. Dive into hedge funds, real estate, and private equity valuations, disclosures, and best practices.
• GIPS for Asset Owners and Fiduciaries
  Explore how pension funds, sovereign wealth funds, and other fiduciaries apply GIPS to demonstrate best practices and fulfill their duties to beneficiaries.
• Carve-Out Portfolios and Partial Composites
  Explore the GIPS standards for carve-outs and partial composites, including guidelines for separate cash balances, preventing performance inflation, and managing client reporting in multi-asset portfolios.
• Supplemental Information and Supplemental Returns
  Explore the role of supplemental information and returns within GIPS compliance, emphasizing transparency, labeling, and practical reporting considerations.
• Case Studies on GIPS Implementation
  Explore real-world examples of GIPS compliance, learn practical steps for maintaining standards, and discover common scenarios that challenge asset managers.
• GIPS Recordkeeping Requirements
  Essential guidance on record retention policies, audit trails, and supporting documentation to uphold GIPS compliance and verify performance calculations.