The 2020 GIPS Standards: Have you ‘flipped the switch’ yet?
CFA Institute released the long awaited 2020 Global Investment Performance Standards (GIPS®) in June 2019 with an effective date of January 1, 2020. With the new standards in place, firms must be in compliance with the input data as of last year. GIPS Reports, previously called compliant presentations, that include 2020 annual performance need to be prepared in accordance with the 2020 GIPS standards. For some firms, this has led to policy changes and some quick revisions to marketing. For other firms, this was a much more extensive undertaking.
Depending on where your firm falls on the spectrum, you may still be finalizing key changes to how your firm markets performance. As February quickly moves into March, firms are looking to begin or finalize the updates needed for the GIPS Reports so that they can market 2020 performance results. Below is a checklist to help determine if your firm has considered all the items needed to ‘flip the switch’ over to the 2020 GIPS standards.
- Pooled fund structures: Assess pooled fund structures, classify broad distribution and limited distribution, update/create lists and descriptions appropriately, and determine funds placement into composites
- Net-of-fee calculations: For pooled funds, determine appropriate net-of-fee calculations for funds with multiple share classes
- Money-weighted returns: Determine which composites and/or pooled funds will present money-weighted returns
- Valuation frequency and calculation requirements: Evaluate valuation frequency and calculation requirements for alternative assets
- Optional provisions: Determine applicability of new optional provisions (carve-outs, estimated trading costs)
- Policies and procedures: Update GIPS standards policies and procedures manual with new terminology and applicable provisions
- Disclosures: Ensure all required disclosures and statistics are included in GIPS Reports
- Marketing: Assess current framework for providing GIPS Reports to prospective clients and prospective investors to ensure the firm can demonstrate how this requirement is met
ACA has helped many firms in their efforts to claim compliance with the GIPS standards. For more information or questions, please reach out to your ACA consultant or contact us below.